What happens if I don't buy health insurance?
You'll have to pony up cash to the federal government if you ignore the requirement to purchase health insurance -- and you could face a pile of medical bills if you're injured or seriously ill.
It may seem like a clever idea to save yourself cash by not purchasing health insurance, but with Obamacare kicking in, you'll have penalties to pay, which could cost you big bucks in the long run.
Not only are you playing financial Russian roulette -- you could be forking out tens of thousands or hundreds of thousands of dollars if you're injured in an accident or become seriously ill -- you'll also have to pay a penalty to the federal government for flouting the law, costing you hundreds or thousands of dollars more.
A wiser decision if you're uninsured is to start shopping on your state health exchange, which opened Tuesday -- with glitches -- as a key part of health care reform.
It's OK if you feel at a loss about the Affordable Care Act, which is also known as Obamacare. You're not alone. A newly released survey by the Commonwealth Fund found that only four in 10 adults were aware of the health exchanges and the financial subsidies available to help cover costs when you buy insurance there, and only one-third of those without insurance were aware of the new way to shop for health insurance.
In the first quarter of the year, 46 million Americans didn't have health insurance, according to the U.S. Centers for Disease Control and Prevention. The establishment of the state health exchanges, or insurance marketplaces, is designed to reduce the number of uninsured.
Who needs insurance?
Starting next year, almost everyone will need to be insured. You can purchase that insurance on your own or through the exchange, have it through your employer, or have it provided by government programs such as Medicare, Medicaid, the Children's Health Insurance Program, TRICARE and veterans health insurance programs.
There are some limited exceptions, such as for those who earn a very low income or are members of certain religious groups, as shown in this graphic by the Kaiser Family Foundation.
While you can start shopping for insurance on a state exchange now, the policies don't take effect until Jan. 1.
What if I don't buy insurance?
If you skip the insurance, you'll pay a penalty. For 2014 the fine is $95 for an individual or 1% of your income, whichever is greater, along with $47.50 per uninsured child, maxing out at $285 for the year.
But by 2016, an individual would pay $695 or 2.5% of your income.
The TurboTax website has a calculator to help you determine how high a penalty you'd pay.
Without insurance, you'd also face a double whammy. By 2016 you'd be forking over almost $700 to the federal government and having nothing to show for it, and still have to pay your own medical bills if you're injured or become ill.
What will insurance cost?
The exchanges will sell four levels of policies -- platinum, gold, silver and bronze. Bronze plans will have the lowest premiums, but cover only 60% of costs. Platinum, on the other hand, will have the highest premiums, but cover 90% of costs.
If you earn up to 400% of the federal poverty level ($45,960 for an individual and $94,200 for a family of four this year) you'll be eligible for a subsidy, which will come in the form of a tax credit. Subsidies are based on your family size and your earnings. The less you earn, the higher the subsidy.
With the subsidies, more than half of Americans should be able to find health insurance for less than $100 a month, according to the U.S. Department of Health and Human Services, although you might choose to pay more.
There also will be caps on out-of-pocket costs. Typically, the maximum an individual will pay in co-payments and deductibles next year is $6,350, and a family's costs will be capped at $12,700.
What if you delay?
Because you can't be turned down for health insurance under the Affordable Care Act if you have a pre-existing condition, you might be tempted to dawdle and see if you actually get sick before purchasing insurance.
But that strategy could easily backfire.
You'll only be able to buy insurance on your state health exchange through March 31, 2014. After that, the open enrollment period will run from Oct. 15 to Dec. 7 each year.
There are exceptions that allow you to purchase insurance on the exchange at any time of the year if you experience a life-changing event, such as moving to a new state, getting married, getting divorced, or having a baby.
While you can purchase insurance outside the exchange at any time, you won't be eligible for a government subsidy, which is one of the cornerstones of health reform.
Bottom line: Ponying up for health insurance now can potentially save you from astronomical costs down the road.
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VIDEO ON MSN MONEY
Understand one thing. The government can get into any bank account you have and take the money for penalties or to pay your bill. Why do you think Pelosi said "vote it in now and read it later"? So they could slip in whatever they wanted. And this was just one of the things that's bad for us all.
No where in the US Constitution is the government allowed to do this to us. 1984 is upon us more than you ever thought it could and would be. We no longer have a Free Democracy.... you are being watched by those who fooled you into voting from them and putting them in office. Obama included.
Note to author- Please do explain why I need to purchase insurance that covers things that I don't need. Most healthy young people could get by with catastrophic insurance to cover major, life altering, expenses without needing to pay for coverage that includes things they'll never use. If I'm not planning on having anymore children how do I save money by being forced to buy insurance that covers childbirth?? I don't, but of course those people who do need that coverage will save a few bucks there since I'm chipping in to cover the cost.
People cry and whine about having to cover the cost of those who are uninsured but this scam is the exact same thing. Make people who don't use the insurance help cover the cost of those who do.
dont pay and nothing happens. read the irs notes on this. they can not come after or enforce by way of levies, garnishmnents or colletions. they can only hold back a refund if you get one. they can not actually collect the "fine" tax. just make sure you always underpay thru the year and claim maxium deductions up front so you will always owe and they cant do squat
This is a totally slanted article that doesn't tell the real story. The penalties are only collectible via IRS intercepting tax refunds - so with proper planning you would never pay the penalty. Secondly, the penalties aren't nearly as onerous as the premiums (even after the premium credit) and that doesn't consider the fact that you have out of pocket medical costs even if you buy the insurance. Although those people who didn't pay their ER bill before don't have any better reason to pay now.
Obvious conclusions: 1) Previously uninsured Healthy people aren't going to buy this insurance just because there is a virtually uncollectable minor penalty. It's just not motivational enough to change peoples minds or habits and only costs them more money than they are paying now with virtually the same risks - even with the voluntary penalty considered. 2) Unhealthy previously uninsured low income people are going to buy health insurance in order to get their illnesses or surgeries taken care of at a huge cost to the system. And then likely drop it after getting their ailments treated.
3) Obamacare is designed to fail (even without GOP assistance) as it just won't attract the numbers of young healthy people needed to contibute via health insurance to make it financially viable. It needs payers that don't get sick.
4) Those buying health insurance (because they can't afford to file bankruptcy) will likely see their premiums rise 80% to 90% within the next 2 years. OUCH!
With a little patience (GOP) this thing will collapse by itself.
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