The Affordable Care Act (ACA), also called Obamacare, requires that every American have health insurance. The law, which provides insurance for certain populations, states that you must have health coverage. But what if you don’t have health insurance? Can you opt out of this requirement? What happens if you do?
What is ‘Minimum Essential Coverage’?
The Affordable Care Act states that you must have “minimum essential coverage” but what does this mean? Chances are that if you have Medicaid, Medicare,Tricare, employer offered coverage, or if you have privately purchased a health insurance plan, your coverage constitutes minimum essential coverage. If you don’t have any health plan at all, you can apply for coverage through healthcare.org. If you have a dental plan, short-term disability, workers comp, or discount plans, bad news, it does not qualify under the Affordable Care Act.
What are the Consequences of Opting Out?
So, what if you can’t afford insurance? Even if you qualify for insurance under healthcare.org, your plan could be too high for your monthly budget. What happens if you decide not to purchase insurance? The ACA requires that you submit proof of insurance when you do your taxes. If you don’t have any you will be assessed a tax penalty. The tax penalty is calculated based on a variety of factors, including the number of people in your household, whether they are adults or children, your income and more. You are likely going to need a CPA or a few hours on healthcare.gov and a calculator to figure out your exact penalty, but the estimated average penalty for 2016 is around $1,200.
What if I Refuse to Pay the Penalty?
What if you decide not to pay the penalty? Well, there is very little recourse under the current law. The IRS cannot send you to jail, collections, or put a lien on your property if you don’t pay the penalty. If you are owed a refund they could potentially take the penalty out of the refund. So, as of now, no one really knows what would happen if you decided not to pay your penalty.
Exemptions to the Tax Penalty
Certain groups can have an exemption to the tax penalty, and actually, most of those without coverage will end up being exempt from the penalty. Some exclusions are based on filing status, income, religion, immigration status, and even being incarcerated.
Pros and Cons of Opting Out
The cost of buying insurance still may be higher for you than the tax penalty. There are many factors you may want to consider when deciding whether or not to opt out:
- Your general health: How often do you go to the doctor? If you are paying for several visits out-of-pocket it may be cheaper to just get insurance.
- Your comfort level with risk: Will you be anxious worrying ‘What if something happens to me or my family’? If you don’t pay the penalty will you be worried about the potential repercussions of that, or simply feel guilty for not paying it?
- Your risk for pregnancy or other health conditions: If it is likely that you may become pregnant or if you smoke, drink, or make other lifestyle choices that may affect your health you may want to weigh the potential costs that could come with those conditions.
- Medications: If you are paying for several medications out-of-pocket you may benefit from a health plan. On the other hand, a high deductible plan may not be of much use when dealing with medications.
Regardless of whether you are in compliance with the ACA or not, medications are likely a factor in your decision and their cost can be a burden. searchRx can help you find the lowest prices on your medications regardless of your insurance status.