Maximum ACA Penalty?

[Edsel]

Belongs in the ACA Category instead of General Discussion, but am posting here because the ACA section has very little activity.

Question:  Is there no maximum penalty? 

I have a high-income taxpayer with coverage from a healthcare provider who is not eligible under the Obamacare requirements.  This insurance has coverage superior to anything available on the marketplace and cheaper by appx $1000 per month.

The calculation is 2.5% of some huge number related to household income.  Is there no absolute ceiling?  In other words, if the number was $1,000,000 then would the penalty be as high as $25,000?

I'll be happy when this thing goes away in 2019.  It will go away if they leave it alone.  I believe some of our legislators are so deliriously happy with the penalty they'll never get rid of it (even though they have exempted themselves).

Edited September 19, 2018 by jklcpa
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[Max W]

The maximum limit is $2085.

For tax year 2017, the penalty is 2.5% of your total household adjusted gross income, or $695 per adult and $347.50 per child, up to a maximum of $2,085.

[Edsel]

Thanks Max.  Fighting with Drake who apparently think there is no limit.

Turns out the limit of $2085 is the maximum for the "flat rate" calculation.

The 2.5% of a modified household income is an alternate calculation.

And, yep, turns out the penalty is the higher of the two...

[RitaB]

On ‎9‎/‎19‎/‎2018 at 6:50 AM, Edsel said:

Belongs in the ACA Category instead of General Discussion, but am posting here because the ACA section has very little activity.

Question:  Is there no maximum penalty? 

I have a high-income taxpayer with coverage from a healthcare provider who is not eligible under the Obamacare requirements.  This insurance has coverage superior to anything available on the marketplace and cheaper by appx $1000 per month.

The calculation is 2.5% of some huge number related to household income.  Is there no absolute ceiling? 

From:  https://www.healthcare.gov/fees/fee-for-not-being-covered/ 

The 2017 fee for not having health insurance

The penalty rises yearly with inflation. For the 2017 plan year, the fee is calculated 2 different ways — as a percentage of your yearly household income, and per person. You’ll pay whichever is higher.

Percentage of income

• 2.5% of yearly household income
• Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace

Per person per year

• $695 per adult
• $347.50 per child under 18
• Maximum: $2,085 per household

[Edsel]

Thanks for the additional clarification.  I suppose if someone had $1,000,000 in targeted household income, they would have to indeed pay $25,000 if they didn't have approved insurance.

[jklcpa]

1 hour ago, Edsel said:

Thanks for the additional clarification.  I suppose if someone had $1,000,000 in targeted household income, they would have to indeed pay $25,000 if they didn't have approved insurance.

The max under the percentage of income method won't exceed the yearly bronze level premium though.  Drake program applies this limitation on the worksheet 8965I it produces.

 

Edited September 20, 2018 by jklcpa
removed Drake suggestion as it was incorrect