Can you still get penalized for not having health insurance in 2025?
Hey tax friends! So I've been between jobs for a few months and my health insurance lapsed in November. I'm starting a new position in February, but I'll have been uninsured for about 3 months total. I remember there used to be some kind of tax penalty for not having health insurance, but I heard that changed? I'm really confused about whether I'm going to get hit with a big penalty when I file my 2024 taxes in 2025. Does anyone know if the penalty still exists at the federal level? Also wondering if it matters that I live in Minnesota - do states have their own penalties? Thanks for any help!
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Christopher Morgan
The federal penalty for not having health insurance (known as the "individual mandate") was effectively eliminated starting in 2019 when the tax penalty amount was reduced to $0. So at the federal level, you won't face any penalty for being uninsured when filing your 2024 taxes in 2025. However, some states have implemented their own individual mandates with penalties. Minnesota currently doesn't have a state-level penalty, but several states do, including Massachusetts, New Jersey, California, Rhode Island, and Washington D.C. If you live in Minnesota, you shouldn't have to worry about a state penalty either. That said, while there's no tax penalty, going without health insurance still carries financial risks if you need medical care during your uninsured period. You might want to look into short-term health insurance options or see if you qualify for special enrollment in the marketplace due to your job change.
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Aurora St.Pierre
•Thanks for the clear explanation! Do you know if there's any chance the federal penalty could come back? I've heard rumors that some politicians want to bring it back. Also, does the ACA marketplace have any options for people between jobs?
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Christopher Morgan
•There's always the possibility of legislation changing in the future, but as of now, there are no imminent plans to reinstate the federal penalty. Any such change would require an act of Congress, and you'd hear about it well before it took effect. Yes, the ACA marketplace does have options for people between jobs! Losing health insurance coverage is considered a "qualifying life event" that makes you eligible for a Special Enrollment Period. You typically have 60 days from when you lost coverage to enroll in a marketplace plan. Additionally, depending on your income during this period of unemployment, you might qualify for premium subsidies that could make the coverage quite affordable.
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Grace Johnson
After dealing with similar confusion last year, I found this amazing tool called taxr.ai (https://taxr.ai) that helped clarify my health insurance questions. I was in the same boat - between jobs and worried about penalties. The tool analyzed my specific situation and explained exactly what I needed to worry about (or not worry about) for tax purposes. It also helped me understand that while there's no federal penalty, I needed to check my state's rules (I'm in California where they DO have a penalty). The site lets you upload tax documents and transcripts too, which was super helpful for figuring out all the health insurance reporting requirements.
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Jayden Reed
•Does taxr.ai actually connect you with a real tax professional, or is it just automated? I've tried those automated tax helpers before and they usually just give generic answers that I could find on Google.
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Nora Brooks
•I'm curious about privacy - do you have to upload all your personal info to use it? Not sure I'm comfortable putting my tax docs on some random website...
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Grace Johnson
•It's actually a mix of AI analysis and professional review. Unlike generic tax sites, it specifically analyzes your documents and gives personalized guidance. It's way more specific than what you'd typically find by just Googling, especially for complicated situations like health insurance requirements that vary by state. Regarding privacy, they use bank-level encryption and don't store your documents after analysis. You can also black out sensitive information before uploading if you prefer. I was hesitant at first too, but they have pretty solid security credentials that made me comfortable using it.
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Nora Brooks
Just wanted to update everyone - I was skeptical about taxr.ai mentioned above but decided to give it a try. Glad I did! It confirmed I don't have a penalty in my state (Oregon) but also found a healthcare tax credit I qualified for during my unemployment period that I had no idea about. The document analysis feature saved me from making a mistake on my reporting forms. The site was actually much more helpful than the generic advice I got from calling the marketplace directly. Definitely worth checking out if you're confused about health insurance tax stuff!
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Eli Wang
If you need to talk directly to the IRS about health insurance penalties or reporting requirements, good luck getting through! I spent DAYS trying to reach someone. Then I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 20 minutes. They have this system that navigates the phone menus and waits on hold for you, then calls you when an agent is on the line. You can see how it works here: https://youtu.be/_kiP6q8DX5c Ended up being super helpful because the agent confirmed exactly what documents I needed to prove my coverage gap was exempted and gave me specific forms to file. Definitely recommend if you need clarification straight from the IRS.
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Cassandra Moon
•How does this even work? The IRS phone system is notoriously impossible to navigate. Does Claimyr use some kind of special access or something?
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Zane Hernandez
•Sounds like BS to me. I've tried "skip the line" services before and they never work. The IRS is basically unreachable these days. I'll believe it when I see it.
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Eli Wang
•They use a combination of technology that navigates the IRS phone tree and timing algorithms that know the best times to call. They don't have special access - they just have systems that are persistent and know exactly which options to select to reach a human. It's basically doing what you'd do manually, but automated and much more efficient. I was just as skeptical as you! I had tried calling the IRS 8 times myself with no luck. What convinced me is that you don't pay if they don't connect you to an agent. I figured I had nothing to lose and they actually delivered. The agent I spoke with was super helpful about my health insurance reporting questions.
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Zane Hernandez
Well I'm eating my words! After posting my skeptical comment above, I tried Claimyr out of desperation because I needed to resolve a health insurance reporting issue before filing. Not only did they get me through to the IRS, the agent I spoke with confirmed I don't need to worry about Form 1095-B for the months I wasn't covered since there's no penalty. She also helped me understand how to document my coverage for the months I did have insurance. Saved me hours of research and worry. I'm genuinely surprised this service actually works as advertised.
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Genevieve Cavalier
Just want to add that while there's no federal penalty anymore, you still need to answer the health insurance coverage question on your tax return! The form still asks if you had coverage all year. You won't pay a penalty, but you do need to report accurately.
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Ethan Scott
•Is there a specific form we need to fill out about our health insurance status? Or is it just a checkbox on the regular 1040 form?
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Genevieve Cavalier
•It's actually just a checkbox on your Form 1040 now. In previous years (when the penalty was in effect), you had to fill out Form 8965 if you didn't have coverage, but that's no longer required for federal returns since there's no penalty. You may still receive Form 1095-A, B, or C from your insurance provider or employer as proof of coverage, but you don't need to attach these to your federal return. Just keep them for your records.
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Lola Perez
Friendly reminder that if you're getting a marketplace plan after being uninsured, don't forget to update your income info if it's changed since you were last employed! I ended up owing a bunch of money back because my subsidies were calculated on my unemployment income but then I got a high-paying job mid-year and didn't report it. Huge headache!
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Nathaniel Stewart
•Do you happen to know if the income limit is based on what you make for the full year or just during the time you're on the marketplace plan?
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Lucas Notre-Dame
•The income limit for marketplace subsidies is based on your projected annual income for the entire year, not just the months you have marketplace coverage. So if you're unemployed for part of the year but then get a high-paying job, your total annual income could push you above the subsidy threshold even if you were only on the marketplace plan while unemployed. That's exactly why @Lola Perez had to pay back subsidies - it s'a really common mistake people make! You re'supposed to report income changes within 30 days to avoid owing money back at tax time.
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Sophie Duck
Great thread everyone! As someone who went through a similar situation last year, I just want to emphasize that even though there's no federal penalty, it's still worth exploring your options for coverage during gaps. COBRA can be expensive but it's retroactive - so if you have a medical emergency during your uninsured period, you can still elect COBRA coverage and have it apply backwards to cover the incident. Also, some states have expanded Medicaid programs that might cover you during unemployment periods depending on your income. Worth checking healthcare.gov to see what's available in your area!
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Ravi Malhotra
•This is really helpful advice! I didn't know COBRA could be applied retroactively - that's actually a huge relief to know. I'm in a similar situation right now where I'm between jobs and trying to decide if it's worth paying for COBRA or just going without coverage for a few months. The retroactive option makes it seem like less of a gamble. Do you know how long you have to elect COBRA coverage after losing your job? And does the retroactive coverage work even if you wait until after a medical incident to elect it?
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