By 2014, it’s required that all Americans have some form of health insurance coverage. If you don’t, you will probably have to pay a fine. While that sounds scary, most people are surprised to learn how much they’d actually owe. But before you get excited about skipping out on coverage to save money, make sure you know what you could be missing out on (and what could cost you more in the long run).
How much is the penalty?
The fee for not having health insurance in 2014 will be whatever is higher for you: $95 or 1% of your household income. In 2015, it increases to $325 and by 2016 it will be $695. And if you have kids and don’t insure them, the fine is $47.50 per child.
Who has to pay the penalty?
Pretty much everyone is subject to the penalty, except for a few groups. Some examples of exceptions are:
- If your income is below the threshold for filing taxes
- You would be eligible for Medicaid but your state isn’t expanding the program to be available to you
- You were only uninsured for a small portion of the year (three months or less)
- You belong to a religion that abstains from medical care or insurance
- You’re a member of a federally-recognized Indian tribe
What kind of insurance do I need to have?
It’s gotta be real coverage (no skimpy discount plans, or partial coverage such as worker’s compensation or critical disease insurance). Aside from this, pretty much any employer, government, or health benefits exchange coverage will qualify. If you currently have coverage, it will most likely count.
Why not just pay the fine?
There are a couple reasons it might not be smart to go without coverage.
First, you can’t just change your mind and buy it at any time. When the health benefits exchanges open in 2014, they will have open enrollment periods (until March 31st the first year, and then Oct 15th-Dec 15th following years). That means that if you don’t buy coverage during open enrollment, and you don’t have any other options, you won’t be able to buy it for the rest of the year.
Second, you’ll be responsible for the full cost of any health care that you get if you end up needing it. With medical debt as the leading cause of bankruptcy, there was after all, a reason behind the effort to get everyone covered.
At the end of the day (or, perhaps we should say, at the end of March), it will be up to you to decide whether going without insurance is worth the small (but growing) penalty.