Not having insurance will cost you, and it’s likely much more than $95

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By Consumers Union on Friday, March 28th, 2014

Going without insurance means taking a gamble on your health – hoping that you won’t get sick or get in an accident and possibly face sky-high medical bills. Of course, you might win that gamble and manage to stay healthy before the next open enrollment period for health insurance.

Either way, going without insurance will likely carry a financial penalty you’re required to pay if you don’t sign up by March 31st or meet certain hardship exemptions. You may have heard that the penalty is $95 per person. But it’s actually more complicated than that – and could cost you much more.

The minimum penalty is $95 for each adult and $47.50 for each child (but no more than $285 per family).  But if 1% of your household income exceeds the minimum penalty, you’ll have to pay more.

The cap on the penalty is tied to the national average cost of a “bronze plan,” which experts think will be about $3,600 for an individual and $11,000 for a family of four. You can estimate what your penalty for not having coverage might be by using this handy calculator from the Tax Policy Center. Of course there are hardship exemptions, for example, if you don’t earn enough money to even file taxes. That exemption is for couples earning less than $20,300 or single people with incomes below $10,150.

But if you’re considering going without coverage and paying the penalty, be sure you aren’t missing out on coverage at little or no extra cost.

As an example, take a single 27-year old living in North Dakota with no children and earning $17,000. The penalty for this person would be just $95 for not signing up for insurance. However, he could qualify for discounted premiums and pay only $9 a month for insurance (in Texas it could be as low as $0 per month, in New Mexico $3, and in North Carolina only $14 per month). His annual premium in North Dakota would be only $108 – just $13 more than the penalty. For that extra $13, he would get insurance that covers free preventive care and gives him peace of mind any time he gets sick or has an accident.

This $95 penalty only applies for 2014 – in 2015, his penalty would go up to $325, and in 2016 it could be $695.

But not everyone’s penalty is as low as $95. Most people will pay 1% of their income as a penalty. Here’s another example.

A family of four, with two adults and two children, earning $95,000 a year would have to pay 1% of their income for not signing up for insurance – that comes out to a $747 penalty. That’s a lot more – eight times more – than the $95 penalty you’ve been hearing so much about.

Paying something for nothing is a bad deal – especially when you could qualify for help paying for insurance. So far, 83% of those who have selected a plan under Obamacare have qualified for help paying for their insurance – that’s over three million people. In many states, if your income is very low, you could get free insurance coverage through Medicaid.

You have 3 days left to sign up – don’t pay a hefty penalty for not having coverage. Find out whether you qualify for help paying for insurance by visiting Health Law Helper, where you’ll get connected with your state’s new insurance Marketplace.

 

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