Yet another acronym. MEC, Minimum essential coverage. Everybody knows you had to have health insurance in 2014. At tax time, new questions on the tax return. Did you have health insurance? If you did, your insurer will give you a Form 1095A (Health Insurance Marketplace Statement – HIMS) to file your return. If you had coverage from another source, like a job, Medicare, Medicaid, or a plan you bought outside the Marketplace:
- You’ll report this simply by checking a box on your federal income tax form
- You won’t have to fill out any additional tax forms
- You won’t get a Form 1095-A
If you didn’t have health coverage for 3 months or more in 2014, one of the following will apply to you:
- You’ll qualify for a health coverage exemption.
- You’ll pay a fee when you file your 2014 federal income tax return.
If you didn’t have health coverage for all of 2014, you’ll pay the higher of:
- An amount that depends on your income. Generally it’s 1% of your yearly household income above a certain amount – $10,150 for an individual, $20,300 for a married couple filing jointly.
- $95 per person who didn’t have coverage ($47.50 per child under 18). The maximum fee per family using this method is $285.
Then if you still don’t get insured, next year the penalty for non-coverage in 2015 is the higher amount of 2 percent of your yearly household income, covering the amount above $10,150 for an individual), or $325 per person, or $162.50 per child.
If you owe, you can still get insurance for 2015 if:
- You didn’t know until after Open Enrollment ended on February 15, 2015 that the health care law required you and your household to have health coverage, or you didn’t understand how the requirement would impact you and your household
- You owe the fee for not having coverage for one or more months in 2014
- You aren’t already enrolled in 2015 coverage through the Health Insurance Marketplace or outside the Marketplace
Open enrollment originally ended Feb. 15, but a special enrollment period began and was extended through April. However, research indicates many people still choose to pay the penalty instead of enrolling in health insurance. Clearly some people prefer the penalty over the various insurance plans. One taxpayer said that it is way cheaper for him to pay his medical expenses which are far less than the $10,000 a year he would pay for insurance, premiums and deductibles and still paying the healthcare costs out of pocket anyway since he never meets the deductible. Hmmm, doesn’t make much sense, does it?
Tax preparers say that though IRS collects the penalty apparently Congress made sure they can’t enforce the collection process, so if you owe it and don’t pay it, the only way IRS can collect it is by deducting it from a refund that might be due.