Speculation that many individuals will opt to pay the annual penalty instead of acquiring health insurance has the success of the Affordable Care Act (ACA), also called Obamacare, in question. However, recent numbers from the Department of Health and Human Services (HHS) show an increase in young adults (18 - 34) who have enrolled in the Health Insurance Marketplace plans in the last month. The HHS stated that 81 percent of these young adults have selected plans above the lowest available plan, the bronze.
The HHS continued to break down those that have signed up for health insurance, stating:
- Nearly 3.3 million individuals have selected plans from the Marketplace website between October 1, 2013, through February 1, 2014. This number breaks down to 1.4 million in the State Based Marketplaces and 1.9 million in the Federally-facilitated Marketplace.
- Of those 3+ million:
- 55 percent are female;
- 45 percent are male;
- 31 percent are 34 and under; and
- 25 percent are between 18 and 34.
So when do you have to have health insurance? The deadline is March 31, 2014, if you want to avoid penalties. For this year, the annual penalty is either 1% of your income or $95 per adult and $47.50 per child, whichever is larger. The fee for being uninsured will increase each year.
The reason some are opting to pay the penalty rather than get health insurance is basic economics: the penalty fee costs less than the monthly premiums. For example, a single person making $50,000 would pay full price for a health insurance plan through the Marketplace. The average cost for a plan could be anywhere from $2,400 to $3,500 a year. The penalty for that individual would only be $400 for the year.
Affordability and necessity are two major components for those deciding on whether or not to buy health insurance. It has been reported that some just don’t feel like they need to pay for health care monthly, stating they would rather pay as they go.
The rules continue to change with Obamacare. Recently announced, mid-size businesses have been given another year of reprieve. Businesses with 50 – 99 employees have until 2016 to comply with the law. Speculation still surrounds Affordable Care Act.
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.