When President Obama signed the Affordable Care Act (ACA) into law in 2010, what quickly became known as a Marketplace Healthcare policy made quite an impact. Healthcare became more accessible thanks to greater access to affordable health insurance, and more people became insured.
But Obamacare also brought in other dramatic changes. Health insurance became mandatory for all US citizens, and they faced tax penalties for Obamacare mandate non-compliance.
Are there still tax penalties if you don’t have health insurance in the United States? If so, what will these penalties cost you, and can they be avoided? We examine the answers to these important questions in this guide to Obamacare tax penalties.
What Are Marketplace Health Tax Penalties?
When the ACA/Obamacare was enacted, health insurance became easier to access. However, it also became mandatory. By making health insurance mandatory, the government aimed to ensure that as many people as possible had access to essential healthcare services.
If you did not comply with the requirement for health insurance coverage, you’d pay a tax penalty when submitting your tax return.
You would generally be liable for Obamacare tax penalties if you did not have minimum essential coverage for yourself and your dependents for one or more months during the tax year and did not qualify for an exemption.
If you were enrolled in ACA-approved health insurance through your employer, you would be considered compliant with the individual mandate. This means you would not be subject to the tax penalty.
Similarly, if your employer undertook to provide you with coverage but neglected to do so, they would be liable for the tax penalty.
Federal Mandate Penalty Repeal
Although certain people were exempt from this mandate and penalty, it was highly unpopular with those who had to pay it. The mandatory penalty was repealed at the federal level through the Tax Cuts and Jobs Act, which was signed into law by President Donald Trump in December 2017.
This meant that in 2019, individuals were no longer required to pay a penalty on their federal income tax return for not having health insurance coverage.
However, the mandate was only repealed at the federal level. The various US states could decide whether to institute an individual mandate penalty, and some have done so. Several other states are considering doing the same in the future.
