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I heard there is a penalty for not buying health insurance. Is that true?

If you failed to get healthcare coverage in the year 2014, you may be responsible for paying a penalty. This is because part of the Affordable Care Act mandates that you have coverage of some type. This does not mean that every person, however, received coverage. Some people might have started the enrollment process but never finished. Others may have felt they were unable to identify the right plan for them. Still others may not have understood the ramifications of going without coverage.

There are a few different terms that capture what this penalty is. It could be referred to as a fine, penalty, individual mandate, or individual responsibility payment. Since open enrollment closed in March, you will only be eligible for a special enrollment period if you meet certain criteria, like having lost your job and the health insurance that goes with it at some point during the year.

The fee changes on a yearly basis, so you should be aware that it will continue to grow as the years go by that you skip getting insurance. In 2014, there are two different ways to calculate the fee. If you or your dependents have gone without obtaining the minimum essential coverage, you will pay whatever of these two amounts is higher: 1% of your yearly household income, or $95 per person for the year (with the penalty being $47.50 for children under the age of 18). Only the amount over the poverty threshold of $10,150 is used to calculate the income percentage payment that you will be responsible for paying.
If you are uninsured for only part of the year, 1/12th of the yearly penalty can be applied to each month. If you are uninsured for less than three months total, you will not have to pay the penalty. You will pay this penalty on your 2014 tax return, which for most people is filed in 2015.

There are some rare exemptions from the fee, but you should seek coverage options during the open enrollment period that happens starting in November. If you go without health insurance coverage, you will be hit with this penalty for all applicable periods without health insurance. The fee is planned for a raise each year that goes by after the official implementation of the Affordable Care Act, so act now to reduce your liability. How