2016 How to Calculate Penalty for No Health Care

In 2016, the Affordable Care Act (ACA) introduced the Individual Shared Responsibility Payment, a penalty for not having qualifying health care coverage. This guide explains how to calculate the penalty amount based on your income and household size.

What is the penalty for not having health care in 2016?

The penalty for not having health care coverage in 2016 was known as the Individual Shared Responsibility Payment. It was designed to encourage Americans to obtain health insurance through the Affordable Care Act marketplace or other qualifying coverage.

The penalty amount varied based on your income level and household size. The penalty was calculated as a percentage of the federal poverty level (FPL) for your household size.

Note: The penalty was only applicable if you were not exempt from the requirement to have health insurance. Exemptions included having qualifying health coverage, being incarcerated, being a member of a recognized religious sect that opposed health insurance, or being a member of a federally recognized Indian tribe.

How to calculate the penalty

The penalty for not having health care coverage in 2016 was calculated using the following formula:

Penalty Amount = (Federal Poverty Level × Percentage) × Number of Months Without Coverage

The percentage applied to the federal poverty level was based on your income level relative to the federal poverty level for your household size. The 2016 federal poverty levels and corresponding percentages are shown in the table below.

Penalty amounts by income level

The penalty percentage applied to the federal poverty level was determined by your income level relative to the federal poverty level for your household size. The 2016 federal poverty levels and corresponding percentages are shown in the following table:

Household Size	Federal Poverty Level (2016)	Income Level	Penalty Percentage
1	$12,140	Up to 100% of FPL	0%
1	$12,140	100% to 133% of FPL	2.0%
1	$12,140	133% to 200% of FPL	3.0%
1	$12,140	200% to 300% of FPL	4.0%
1	$12,140	300% to 400% of FPL	5.0%
1	$12,140	Over 400% of FPL	6.0%

Similar tables were used for households of different sizes. The penalty percentage increased as your income level increased relative to the federal poverty level.

Example calculation

Let's calculate the penalty for a single person with an income of $25,000 in 2016.

Determine the federal poverty level for a single person: $12,140
Calculate the income as a percentage of the federal poverty level: $25,000 ÷ $12,140 ≈ 2.06 or 206%
Determine the penalty percentage based on the income level: 3.0% (since 206% falls between 133% and 200%)
Calculate the penalty amount: ($12,140 × 0.03) × 12 months = $437.16

Therefore, the penalty for not having health care coverage for a single person with an income of $25,000 in 2016 would be approximately $437.16.

Frequently Asked Questions

Who was required to pay the penalty in 2016?: U.S. citizens and residents who were at least 18 years old and not exempt from the requirement to have health insurance were required to pay the penalty.
How was the penalty collected in 2016?: The penalty was collected through the Internal Revenue Service (IRS) as part of the individual's tax return. It was reported on Form 8965 and added to the tax liability.
Was the penalty refundable in 2016?: No, the penalty was not refundable. It was treated as an additional tax liability that could not be offset by other tax credits or deductions.
Could I get help paying the penalty in 2016?: Yes, individuals who could not afford to pay the penalty could apply for an exemption or request an installment agreement with the IRS to pay the penalty over time.
Was the penalty the same for everyone in 2016?: No, the penalty amount varied based on your income level and household size. The penalty percentage increased as your income level increased relative to the federal poverty level.