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Small Business Employee Benefits and HR Blog

How to Avoid the Individual Health Insurance Mandate "Tax"

The below content should not be taken as legal or tax advice. It is meant to be taken as humor.

The Individual Mandate requires most individuals to purchase health insurance, or else pay a penalty on their tax return each year. Last week, the Supreme Court found Health Care Reform's "Individual Mandate" to be constitutional because the PENALTY is really a TAX. The intention of the individual penalty is to reduce the "Free Riding" effect in the health insurance market (a free rider is someone who is healthy and does not purchase health insurance until they need it). If you are looking for a way out of the mandate, here are 5 ways to avoid the tax...avoid individual health mandate tax

Background on the Insurance Mandate's Tax Penalty 

Effective January 1st, 2014, certain individuals (referred to as "applicable individuals") will be required to maintain health insurance that meets a minimum standard (referred to as "minimum essential coverage") for themselves and their dependents.  "Applicable individuals" who fail to maintain "minimum essential coverage" will be required to pay a tax "penalty" on their tax return.

According to the bill, here are 5 ways to avoid paying the tax (without actually purchasing "minimum essential coverage"):

1. Apply for a religious exemption to avoid the health insurance tax

Claim that your religion (whether that be Christianity, Judaism, Islam, etc.), does not allow you to purchase health insurance.

2. Join an Indian Tribe to avoid the health insurance tax

Members of Indian tribes are not subject to the penalty. Here's a WikiAnswers thread about how to join an Indian Tribe.

3. Join a Health Care Sharing Ministry to avoid the health insurance tax

Some associations cost $99-$135 per member per month.

4. Renounce your U.S. citizenship to avoid the health insurance tax

If you are not a U.S. citizen, you don't have to pay the penalty. Here's an article about renouncing your U.S. Citizenship.

5. Go to Jail to avoid the health insurance tax

If you do something to incarcerate yourself, you can avoid paying the penalty while your in jail.

Of course, the easiest way to avoid the tax is to simply purchase health insurance that meets the minimum coverage requirements.

The Comprehensive Guide to the Small Business HRA

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