Full Year vs One Month (Same Penalty)

[ILLMAS]

TP was not covered for Dec 2015 to Feb 2016, TP does not qualify for short coverage gap, however the penalty for not having insurance for one month in 2015 is the same amount as not having insurance for the whole year?  Is this possible?

[RitaB]

51 minutes ago, ILLMAS said:

TP was not covered for Dec 2015 to Feb 2016, TP does not qualify for short coverage gap, however the penalty for not having insurance for one month in 2015 is the same amount as not having insurance for the whole year?  Is this possible?

I think TP does qualify for the exemption for 2015, but not 2016.  See #22 at the IRS site, link below.  One month penalty being the same as a year's penalty I have not come across and that does not sound correct.

https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision

 

[ETax847]

From what I have read,   "If you are uninsured for only part of the year, the penalty is prorated to cover only your uninsured months. You're not assessed a penalty for a gap in coverage less than three months long. This is called a “short gap.” However, you are only allowed one short gap per year".

[jklcpa]

Rita is correct.  Enter the code on the 8965 for the short coverage gap and the penalty will not be assessed for 2015.

[Chowdahead]

I thought the short coverage gap was actually worded "Less than 3 months"  meaning it's actually 2 months of non-coverage.  

Shouldn't the program generate a yellow warning to complete an exemption if when calculating the penalty, the numbers of non-covered months on the 8965 is 2 months or less?

I too have come across the program generating the same penalty for 4-6-7-or 8 months of coverage.  When checking or or unchecking boxes on the 8965 to calculate the penalty, the penalty doesn't shift.

[jklcpa]

19 minutes ago, Chowdahead said:

I thought the short coverage gap was actually worded "Less than 3 months"  meaning it's actually 2 months of non-coverage.  

Shouldn't the program generate a yellow warning

If you read item #22 in the link that RitaB provided, it explains that if a coverage gap spans the two tax years and 2 of those months are in the year of filing, that scenario will fit within the meaning of the short coverage gap.

 

22 minutes ago, Chowdahead said:

I too have come across the program generating the same penalty for 4-6-7-or 8 months of coverage.  When checking or or unchecking boxes on the 8965 to calculate the penalty, the penalty doesn't shift.

 

That sounds like either you are missing some part of the input somewhere within the program, or the program has a bug that should be reported to ATX

[Abby Normal]

This is copied from the slides of a CPE course I took.

Shared Responsibility Payment
Penalty Is the Lesser of:
Sum of the monthly penalty amounts, or
Average cost of bronze level insurance.
Monthly Penalty Amounts Are Greater of:
The applicable flat dollar amounts, or
A % of the family unit’s combined MAGI in excess of
their filing threshold for the year divided by 12

Flat Dollar Amount Penalty Is Lesser of:
The sum of the monthly amounts for members of the family
from the table below, or 300% of the per adult penalty.

Flat dollar amounts (annual)
Year             2014    2015      2016
Adult:       $95.00 $325.00 $695.00
under 18: $47.50 $162.50 $347.50
Percentage of Income Rates: 1.0%  2.0% 2.5%

I think the annual flat dollar amount cap of $325 per adult will apply for most singles. Families will vary a lot more.