There are a number of tax issues surrounding healthcare that have recently taken center stage. The state of Colorado has proposed, and decided to vote on a single payer healthcare system, which would make it the first state to provide free healthcare for residents. This would be a huge move for the state, which under these provisions would allow residents to choose their healthcare providers, with all expenses paid by the state. Although this is a bold move, a 10 percent payroll tax raise has also introduced to offset the $25 billion a year cost of implementing this program. To pay for state coverage, employers would incur a 6.67 percent payroll tax fee, with employees paying 3.33 percent.

healthcare coverage in coloradoThis comes on the heels of the individual mandates for those who don’t currently carry health insurance. The upcoming tax year will affect a number of individuals who chose not to purchase health insurance will incur an individual shared responsibility payment. This will be an item on the federal tax return for the year in which coverage was not obtained. The fees for this penalty are calculated in two different ways:

  • It will be 2.5% of the household income; or
  • $695 per person, with $347.50 for each child under 18

To pay these taxes under the percentage method, the part of the household income above the yearly tax filing threshold will be counted. The people who will be affected under the per-person method are the individuals who do not currently carry health insurance in the household.

For those individuals who have had coverage for some part of the year, the fees associated will be 1/12 of the amount for each month the insurance has lapsed. Fees are deducted from the federal tax refund, or fees will be paid with the return for the year.

The tax penalties for healthcare coverage will continue to rise with each passing year as an incentive for individuals to sign up for healthcare. Consulting with a personal tax accountant or tax accounting service can help with your healthcare taxes for the current and upcoming year.