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This is about USA where health insurance is mandatory for most people (with the exception of some groups) due to the Affordable Care Act and Patient Care and Coverage Act (aka Obamacare).

This question applies only to those States where people have to pay income taxes to the State and where the States enforce a penalty on a lack of health insurance.

Some States, such as Massachusetts, had mandatory health insurance already before Obamacare made the requirement nationwide. People who opted not to get health insurance in MA have had to pay a penalty to the State with the income tax.

Because of this, is it possible that a freelancer without health insurance could (at least in MA) end up having to pay a lack-of-insurance penalty separately to both IRS and to the State they file their taxes in?

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    I think this is a question for a CPA, not other freelancers. – Scott Mar 20 '15 at 19:02
  • Failure to provide proof of insurance generates a fine at the federal level fix this and your state requirements should be satisfied. – Mike Beeler May 17 '15 at 5:01
  • I realize this is kind of unrelated -- but just a comment to point out that if you are a sole proprietorship or single-member LLC, all healthcare costs are tax deductible. I wasn't aware of this until this year. So really, for some, the choice is a tax deduction or a penalty. – Scott Jan 15 '16 at 20:55
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In my experience, in South Carolina, when I made below a certain amount. I did not get penalized. So the best course of action would be to talk to a tax professional. Best of luck to you.

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I do a mix of 1099 and w2 work. Even when I have a w2 I still pay for my own insurance through the exchange. I do this because even though I am losing money by paying my entire insurance, I don't lose big money by paying the penalty. The first year it became active, I had a mix of insurance coverage and it was it incredibly difficult to verify insurance via the exchange. ie. First three months, I purchased my own insurance. Next six months I was on company insurance. Final three months I was 1099 with different company and thus on my own insurance.

I was penalized for early withdrawl of insurance in first part of the year. Then at end of year the exchange provider said I was convered for just three months. I was with the provider for 9 months. Not to mention when I needed coverage they said I did not have insurance even though they were happily taking my checks but providing coverage.

It took months to get everyone on the same page. At one point I had a three way call with exchange, the bank and the insurance company.

At that point, I tell employers, if they only do w2 contracts that is fine. I will do w2, but I will not participate in insurance and I would prefer a higher rate.

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President Trump has signed an Executive Order to tell the IRS NOT to enforce fines levied for lack of health insurance due to the expected revision of the ACA. While it is still law, it is not to be enforced.

"It orders agencies to “waive, defer, grant exemptions from, or delay the implementation of any provision or requirement” of ObamaCare that imposes a “fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

It was stupid anyway, young healthy people chose to pay the fine of a couple hundred dollars as opposed to thousands in premiums. Math never stops.

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