Income Tax

What Does Income Tax Mean?

Income taxes are taxes imposed by the United States federal government on its citizens based on the income they earn. These taxes are calculated as a percentage of a person’s total income. In the context of insurance, taxpayers who do not have health insurance may face financial penalties if they indicate on their income tax return that they lack health insurance coverage.

Insuranceopedia Explains Income Tax

Before the Affordable Care Act, it was not required for people in the United States to have health insurance coverage. However, under the ACA, it is now mandatory. Those who cannot afford private health insurance can sign up for coverage through Healthcare.gov. If they qualify, they may receive insurance at a reduced cost. The penalty for not having health insurance, which is reflected in income tax returns, is intended to incentivize people to obtain coverage. However, individuals with high incomes may not qualify for government-sponsored insurance.