How To Get Out of Paying the Obamacare Tax

The Obamacare tax is finally biting Americans this year, but it’s mostly toothless.

As taxpayers fill out returns leading up to Tax Day on Wednesday, they are for the first time encountering a few new lines of text asking whether they had insurance last year and if so, whether they used federal subsidies to buy it.

That first question — whether they’re covered — has caused more of an uproar than perhaps any other part of the Affordable Care Act. The “individual mandate” triggered a major Supreme Court case three years ago, in which justices were asked to strike it and potentially the entire law, but upheld it by defining the penalty for being uninsured as a tax that falls under Congress’ taxing authority.

The thought all along has been that without a financial penalty for remaining uninsured, the healthiest Americans won’t be motivated to buy coverage, leaving the insurance pools full of sicker, more costly customers.

Congress included in the healthcare law the uninsured fine to prod healthy people, especially those in their 20’s and 30’s, to buy coverage even if they think they don’t need it right now. A tax filer checks the “no” box on their return this year could be subject to a fine.

Yet the majority of the uninsured won’t end up having to pay up. This year at least, the penalty’s bark is a lot worse than its bite. Here’s why: