Health Insurance Mandate? Not Really...
You don’t have to buy health insurance under the Affordable Care Act. You can choose instead to pay a penalty for not buying it. So when folks talk about delaying the mandate for one year, quite often you don't hear, as Paul Harvey used to say, ‘the rest of the story.’ The private for profit health insurance companies HAVE to take everybody starting January 1st. Insurance works with the law of large numbers. The other important concept is ‘adverse risk’ selection. That describes what happens when only the people who NEED insurance, take it. If only sick people signed up for insurance, the equation would go out of kilter. That is why the individual mandate or penalty is there. I don't know about you, but I would rather be with an insurance company that makes money.
I’ve heard many people say “I’ll just pay the $95.” However again, there is more to the story. The first year penalty is $95 or 1% of your taxable income, whichever is GREATER. So if your adjustable gross income is $40,000 your penalty for not signing up is $400. In 2015 the penalty is $325 or 2% of your income, whichever is GREATER. So the dude with $40,000 income who says, ‘no thanks’ to insurance pays $800 in penalties. Then in year 3 it goes up to $695 or 2.5%. So our 40K earner is getting whacked $1,000 for year 2016.
Do you need help sorting through this and other aspects of the Affordable Care Act?
We are here to help. We still think your health care is a personal decision.
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