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What It'll Cost You to Go Without Health Insurance

October 7, 2016

Now that the Affordable Care Act (ACA) has been around for a few years, you’re likely aware that if you choose to go without insurance, you’ll be subject to a tax penalty.

But that’s not the only risk of going without health insurance.

You’re vulnerable in more ways than one when you decide to forego obtaining a Qualified Health Plan (QHP)

The tax penalty

Obamacare has a mandate for people who choose to go without health insurance. These individuals will be required to pay a tax penalty -- if they don’t meet an exemption.

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You may be exempt from the penalty if you:

  • Had qualified coverage for 10 months of the year.
  • Your income is lower than the tax-filing threshold, so you didn’t file taxes.
  • The cost of qualified coverage is more than 8 percent of your household’s per person income.
  • You were denied CHIP or Medicaid coverage by your state.
  • You were covered by qualified health insurance when the open enrollment period occurred.

What will it cost you?

There are two ways you need to use to figure out your potential tax penalty. The greater of the two is what you would pay:

  • In 2016, the penalty was $695 for an adult and $347.50 for each child, with a cap of $2,085 per family.
  • OR, 2.5 percent of your household income beyond your tax filing threshold.

(Keep in mind that in 2017 and beyond, the tax penalty amount will be indexed to the Consumer Price Index, with maximums gradually rising over time.)

So, for example, if you went six months in the year without health insurance, you’d owe 6/12 of the total amount. If you go the entire year without benefits, you’ll owe the entire amount.

In addition to having to pay a tax penalty, you’ll also risk your:

  • Health. If you have an accident or are diagnosed with a major medical condition, financial concerns may prevent you from seeking the medical care you need.
  • Finances. Having to pay out-of-pocket for medical expenses -- even if you don’t experience a catastrophic event -- can be devastating to your financial health.
  • Future. Dealing with a medical event without health benefits can change your future for the worse.

How to avoid it

Don’t put your health and finances at risk by going without health insurance. Instead of paying the tax penalty, investigate your options for avoiding the fine:

  • Purchase health insurance during the open enrollment period. Between November 1, 2016 and January 31, 2017 you can purchase health insurance on the marketplace.
  • Determine if you qualify for CHIP or Medicaid.
  • Investigate qualifying factors for a special enrollment (SEP). Outside of the open enrollment dates (Nov. 1, 2016 and Jan. 31, 2017), you can only purchase health insurance IF you qualify for exemption. Two types of exemptions exist: hardship and regular. These include conditions like it’s unaffordable, no-filing or low-income requirement, hardship due to financial reasons (or others), short-coverage gap (going without coverage for less than three months consecutively, religious conscience, health care sharing ministry, not lawfully present, incarceration, Indian tribes, and others.

If you’re unsure of what your health care needs are, you don’t know if you can afford coverage, or you’re wondering if you are exempt, talk to a health benefits expert.

InsureOne Benefits is happy to help you navigate the health insurance marketplace and choose a plan that suits your needs. Just give us a call!

InsureOne Benefits

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