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.

By MSN Money Partner Oct 4, 2013 2:40PM

This post comes from Susan Ladika at partner site Money Talks News. Money Talks News

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.

Health care © Getty Images

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.

More on Money Talks News:


Oct 4, 2013 5:46PM
You know Obamacare is bad if the people who created for it and voted on it DON'T WANT TO USE IT AS THEIR OWN HEALTHCARE. How fair is that? Shouldn't Obama, Congress, and the federal government have to use the plan they make us use?
Oct 4, 2013 4:55PM

This train wreck is going to destroy America.

Oct 4, 2013 5:04PM
What's 2.5% of nothing? I'm sure all those broke people who can't afford insurance will gladly be shelling out $695 to the govt, just to not have health insurance. (NOT!) Those people are the ones that caused healthcare prices to skyrocket in the first place & now they're getting out of paying anyway. This program doesn't solve anything except for making the responsible people who already pay in, pay more.
Oct 4, 2013 5:09PM
This has to be one of the worst injuries inflicted on the people since world war 2
Oct 4, 2013 5:14PM
I say defund it. It didnt have popular support when it was forced through and less now. A federal program with no funding has no teeth to force you to buy something you dont want.
Oct 4, 2013 5:05PM
The article only mentions paying the premiums or fines. It doesn't get into the good stuff if you don't pay either........ like having it sucked from your account, losing your license and federal tax liens on your house. Who wouldn't want a health system with all these extra goodies.
Oct 4, 2013 5:00PM
This healthcare bill is still a bunch of crap, forcing people into buying something they did not vote on or want, when the government can get away with forcing you to purchase this what will they force "WE THE PEOPLE" next, Electric cars and not bigger than a pregnant roller skate.
Oct 4, 2013 5:21PM
this is communism at its finest. i wont participate, but thanks for asking...... telling me to. i have done the charts and i cannot see anyone purchasing this for less than 400 per month. it also has no optical or dental coverage, it is mostly hospitalization and you can buy it much cheaper by calling a local agent. this whole thing is  a sham, please don't fall for it.
Oct 4, 2013 5:27PM

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.

Oct 4, 2013 5:11PM

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.

Oct 4, 2013 5:09PM
We actually think the homeless- yea no place to live people are going to rush out and get insurance?? LOL thats a laugh omg who thinks of this stuff?
Oct 4, 2013 5:17PM
I want to know just how the Government or any other conglomeration or group of individuals can make anyone buy medical insurance or healthcare if they don't want to pay a premium? Is it really true and can they put someone in jail if they refuse to pay? Just what happened to our right to make our own choices and/or decisions?
Oct 4, 2013 5:24PM
The subsidy comes in the form of a tax credit?-------You got to be kidding!  I'm sure everyone who is low to moderate income will have no problem shelling out a few hundred extra every month and wait for a tax credit.
Oct 4, 2013 5:51PM
I am sure all the brothers in hood will be the first ones in line. What a joke .Just another way to take from the working man and give to the worthless. A big shout out out to all the people that voted for the DEMOCRATS that made this disaster possible. Not to the hand out crowed, we know why you vote for liberals,the workers that were just that ignorant.
Oct 4, 2013 5:12PM

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

Oct 4, 2013 5:40PM
Who is the idiot that wrote  this simplistic view point on ObamaCare? Does he work directly for the WH. Here is an alternative to Mr. Know it all's plan. If I were under the age of 40,I would pay the penalty and go without insurance ,at least for 2-4 years. If you don't get injured or require a hospital stay, which is unlikely for most people in this age group, you don't need insurance. Suppose you get into an accident and you don't have insurance. When you get out of the hospital, go out and buy insurance and have the hospital file a claim. As for the hospital, they have to admit you unless you are one of the exceptions, which you wouldn't be. Give up on the thought that insurance isn't going to cost a lot because it is going to cost a lot. Even when the penalties rise to $2000 per year,it will be cheaper to forgo insurance and pay the two grand than it will be to pay $500-$900 per month for insurance. Remember, what you pay has nothing to do with who you are,it's all about your gross income.Second thing to remember,you have to help to pay for the 15% of Americans who currently don't have insurance. I did an application the other night. Currently I pay $700 a month, for me,my wife and one child. That's with a $5000 deductible. My lowest quote for insurance was $1350 per month with a $20,000 deductible. It's cheaper for me to self insure and pay the penalties.
Oct 4, 2013 5:17PM
The only reason we are here is because the supreme court changed the wording of this to make it tax remember this would not be a tax Mr. Obama would not raise taxes to implement his plan. Then the only way to get it to be legal was to call it a tax. Free health care from the man who got elected on the promise of free stuff. So how many of our elected officials have stock in the only winners in the mees the insurance companies?    
Oct 4, 2013 5:26PM
Get real!  Where they going to get hundreds of thousands of dollars if you don't have health care insurance and end up in the hospital?  With most Americans living pay check to pay check, it's hardly likely that they can be sued for hundreds of dollars much less hundreds of thousands of dollars they don't have.    Why do you think there has been no repercussion to those that don't carry insurance?  They get their hospitalization with doctor care while suckers like me pay tens of thousands of dollars a year for health insurance so that they can go without!   I on the other hand can't afford to go with out insurance since I own my home, I own my car, and I have enough money saved to live a meager life style for the next 30 years!  My bad...I should have lived pay check to pay check instead of living a meager life style while I saved for retirement!  Now I live in poverty so that I can afford to pay for my health care insurance while I wait for Medicare age to arrive!  
Oct 4, 2013 5:39PM

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.

Oct 4, 2013 5:15PM
Heathcare isn't expensive because of insurance companies, it's expensive because America is an increasingly fat and unhealthy nation. Insurance is all about risk and reward. To work you need lots of people paying in, and only a few using the insurance. What Obamacare does is allow everyone to get insurance regardless of pre-existing conditions. The risk increases, which increases the cost for insurance companies. When their costs go up, the cost of the insurance goes up. Under Obamacare people that already have insurance will see their costs go up to support all the new risk coming into the market. And since the people getting federal subsides are not actually paying much for their own care, the amount the government spends on healthcare subsidies will continue to rise and rise as insurance companies charge more and more. 

What are we left with? Poor lazy people can afford to buy insurance because of federal credits, at the expense of regular working folks who will see increased premiums and reduced benefits offered by their employers. We've already seen companies cut back workers' hours, and eliminate jobs in order to avoid having to provide insurance. Like every other entitlement, the average working people get screwed to support the welfare class. 

And through all that, our healthcare problem is not solved. We are still fat, still unhealthy. As we require more and more healthcare because of our unhealthy lifestyles, the cost will continue to rise and rise not only for government but for working folks. So thank you Obama, thank you liberals, thank you Democrats. You've lit the fuse that will eventually destroy the greatest country in the world. 
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