Health Care Reform

Under the recently passed Health Care Reform legislation all U.S. citizens and legal residents will be required to have a minimum level of health care coverage.  As usual, all does not mean everyone… exemptions will be available.  Individuals who have religious objections, are American Indians, incarcerated individuals, those that can show financial hardship, those without coverage for less than three months, aliens not legally present in the U.S., those for whom the lowest cost plan option exceeds 8% of household income, those residing outside of the U.S. and those with incomes below the tax return filing thresholds will all be exempt from the mandatory coverage provision.

Penalties will be assessed for individuals not exempt from the mandatory coverage provision.  The penalties will begin in 2014 and will progressively increase until the full amount is reached in 2016.  The penalty will be the GREATER of: $95 per person or 1% of taxable income in 2014; $325 per person or 2.0% of taxable income in 2015; $695 per person or 2.5% of taxable income in 2016.

/post by Brenna Prater, CPA