As the first segment of the second enrollment draws to a close, a lot of people are asking the standard question – what happens to me if I don’t have health insurance throughout 2014? Most people know that the individual mandate requires them to have health insurance in 2014, failing which they will be subject to tax penalties, but not everyone knows how much those penalties will cost. Contrary to what people believe, Obamacare penalties are not going to be tlight for families, and they are set to triple in the next financial year. So if you still don’t have health insurance, let’s see how Obamacare penalties can affect you at tax filing this year.
First off, a lot of people are assuming that they will have to pay a meager $95 fee per uninsured person this year. No, that’s not how it works. Most people will be required to pay a higher penalty than the standard, least penalty of $95 per person that’s capped at the national average premium for Bronze Plans, which is $285 per family. On the other hand, the maximum penalty can go up to $11,000, depending upon the household income of the family. Usually, the penalty for each person will be one percent of the household income, and it could cost thousands of dollars to the family of four. Furthermore if you do not have health insurance in 2015 as well, the 2016 tax filing could see a tripling of the minimum penalty per person.
On the positive side if you do not have health insurance, it is not necessary that you will have to pay Obamacare penalties, as there are exemptions available for uninsured people. If your income is less than the tax-filing minimum, you are not required to pay penalties. Members of certain religious groups and tribes are also exempted from this mandate. If you were uninsured for less than three months in the year, you will not be required to pay any penalties.
The bright side of these Obamacare penalties is that they have motivated people to purchase affordable health insurance that keeps them protected from unprecedented costs in the wake of an accident or serious illness. According to a survey by Enroll America, 19 percent respondents felt that without the individual mandate, they wouldn’t have considered getting health insurance under ACA. According to estimates, roughly 87 percent of Americans already have health insurance, leaving only a small number of people who would actually have to pay those penalties. Although the penalties work out to be lesser than the price of health insurance, they do not provide any kind of insurance coverage.
The administration understands that although people want health insurance, they might be inclined to pay penalties, as they cost less. In order to motivate people to get health insurance and to avoid paying penalties, the Obama Administration is promoting the positive aspects of the law, such as availability of subsidies for low and medium income families, instead of the negative aspects of the law, such as slapping of penalties on those who do not comply with the law. Affordability and deadlines are two major talking points the administration is using in its outreach programs in the second enrollment.
At the same time, while encouraging people to get health insurance, the Obama Administration is discouraging people who rely on emergency care services in the nation, even when they could afford health insurance. The encouragement provided through these means will also contribute to the overall Obamacare risk pool, which has to have as many people as possible to share the responsibility of sicker people in the system. The presence of more people in the covered pool will also contribute to lesser usage of emergency rooms at hospitals, which can take up a lot of taxpayer money. This setup contributes to keeping the law afloat even when sick people with preexisting medical conditions enter the market, as designed by Obamacare. Ultimately, these Obamacare penalties are a greater good that can transform the healthcare risk pools and make the country healthier.