Since 2014, almost all Americans have been required to have health insurance. Some people are eligible for an exemption from this requirement, but non-exempt people who go without health insurance are subject to a penalty that’s assessed by the IRS. The penalty is prorated for the number of months the tax filer was uninsured during the year (one short gap of less than three months in duration is allowed without a penalty).
The penalty started in 2014 at $95 per uninsured adult ($47.50 per child) up to $285 per family, OR 1 percent of taxable household income, whichever was greater. By 2016, the penalty increased to $695 per adult ($347.50 per child) up to $2,085 per family, OR 2.5 percent of taxable household income, whichever is greater.
The percentage of income penalty will remain at 2.5 percent going forward, although it is always capped at the national average cost of a bronze plan. The flat-rate penalty is indexed annually starting 2017 (for 2017 and 2018, however, the index adjustment was zero dollars, so the flat-rate penalty remains at the 2016 level through at least 2018).