Uninsured children are not excluded from the Affordable Care Act’s Shared Responsibility Payment under normal circumstances. The law’s Individual Mandate applies to all citizens, including those under 18 years of age.
Taxpayers responsible for the well-being of a child are obligated to provide them with qualified Minimum Essential Coverage or pay an Obamacare fine equal to one half of the adult rate.
This imposed liability requirement is true regardless of whether you actually claim a child as a dependent on your tax return or not.
Understand that you cannot avoid responsibility for providing coverage to your child or any other dependent under the Affordable Care Act’s Individual Mandate legislation.
Flat Rate Penalty for Children
This Obamacare fine will always be 50% of the adult flat rate amount. Based on the adult rate, the amount comes to $47.50 in 2014 for each child.
This amount will be added to your household amount or your own tax return based on the child’s attributable dependence. The same time frame and deadlines apply to most everyone including children.
Calculating the Fine for a Child
The fine for children is also calculated based on the number of full calendar months without health insurance. For example, if a child is uninsured for half a year you would divide the fee in half based on 6 months.
In this case, the Obamacare fine attributable to the child would be $23.75 based on a half year in 2014. We calculate the fine for you. Use our Obamacare penalty calculators.
A rare case can occur in which there is no penalty attributable to a dependent child even if you are in violation. The law has not specifically addressed this but we will do so here.
For example, assume for a moment you are filing as a married couple but also claim a dependent, who is an adult, aged at least 18 years.
Since 3 adults already equal $285, assuming high income doesn’t require a 1% fine, the children would not factor into the flat rate Obamacare fine calculation. Such a situation would be rare but can happen.
Future Years for Children
In 2015 the Obamacare penalty increases to $162.50 for each dependent child. This amount is based on an entire year of being uninsured. It goes up again 2016 to $347.50 per child.
Starting in 2017, the Obamacare penalty will increase based on the official inflation rate.
Children Turning Age 18
If a child becomes 18 years old during a particular tax year, it will factor into an Obamacare fine calculation. This is complicated since two penalty rates will apply.
However, if the combined MAGI exceeds a certain amount a percentage penalty would supersede any flat rate calculation.
If you expect a relatively low Adjusted Gross Income, any full months an uninsured individual is under 18 years of age will be penalized at the child rate which is half the adult rate.
While, any full months an uninsured individual is 18 years of age will be penalized at the full adult rate.
Complicated Obamacare Birthday
An 18th birthday of a dependent uninsured individual presents a unique situation under the Affordable Care Act’s Share Responsibility Payment structure.
It’s advisable to calculate any possible Obamacare fine for such a situation separately if the amount will be based upon a flat rate amount instead of a percentage of your income.
For Adopted Children
If you care for an adopted child there are special Obamacare considerations to consider if you expect that child to be without insurance for more than 3 months.
Even if someone else has a legal obligation to provide the child’s hearth care, you would still be responsible for the fine if you may claim them as a dependent.
Section 5000A of the Affordable Care Act specifically addresses this unique situation by defaulting to IRS rules regarding the ability of a taxpayer to claim an individual as a dependent regardless of if you do or not.
Waivers for Children
However, a special Health & Human Services waiver, 45 CFR 155.605(g)(1) has been put in place for custodial parents if the child is ineligible for Children’s Health Insurance Program (CHIP).
This hardship exemption was put in place specifically for such situations and is considered a special type of exemption, although it seems to be a type of temporary Obamacare penalty waiver.