Penalties for Being Uninsured in 2014 and Beyond

Beginning in 2014, the federal Patient Protection and Affordable Care Act requires most legal residents of the United States to obtain health insurance or pay a penalty.  The penalty will be the greater of a flat dollar amount or a percentage of family income as follows:

• In 2014, the penalty is the greater of $95 per adult and $47.50 per child (up to $285 per family) or 1.0% of family income;
• In 2015, the penalty increases to the greater of $325 per adult and $162.50 per child (up to $975 for a family) or 2.0% of family income;
• In 2016, the penalty increases to the greater of $695 per adult and $347.50 per child (up to $2,085 for a family) or 2.5% of family income; and
• After 2016, penalty amounts increase annually by the cost of living.

The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) estimate that about 30 million nonelderly U.S. residents will be uninsured in 2016, but the majority of them will not be subject to the penalty.  Unauthorized immigrants are exempt from the mandate to obtain health insurance.  Others are subject to the mandate but exempt from the penalty (e.g., their income is too low, they are members of an Indian tribe, or the premium they would have to pay exceeds a specified share of their income).  CBO and JCT estimate that about six million people will pay a penalty because they are uninsured in 2016.