Buy health insurance to avoid penalty under Obamacare

Posted: Tue Mar 26, 2013 03:37 pm Post Subject:

Yes, there is a penalty for those persons, beginning in 2014, who choose not to purchase health insurance, but the eventual penalty in 2016 is $750, not $695. And that is an annual amount.

If you find the cost of health insurance too great, you can simply pay the annual penalty. It's only going to be $95 in 2014, and a mere $350 in 2015. After 2016, Congress is likely to raise the penalty each year until it is meaningful enough to cause folks to purchase health insurance.

In the meantime, your alternative if you end up sick or injured as a result of your own efforts, without the mandatory health insurance, is that you will be stuck with 100% of the bill and you will not be able to obtain assistance through Medicaid if you were not eligible for it in the first place.

In the weeks leading up to October 1, 2014, there will be much more information coming about the kinds of plans that will be available through the various Health Insurance Exchanges, what the costs will be, and what tax credits you might be eligible for if your "modified adjusted gross income" is less than 400% of the federal poverty level (about $93,000 for a family of four). Your cost of insurance, with the credit applied directly toward the premium, could be fairly small, and you might find it affordable after all.

So don't panic today. Keep breathing and see what happens in the next several months. Then plan on paying much higher income taxes in the future to support all this "free stuff" Obama and the Democrats promised folks to get their votes.

Posted: Tue Apr 02, 2013 07:46 pm Post Subject:

As usual, Max is wrong. The penalty will be $695. Not getting insurance won't allow you to qualify for Medicaid, but with insurance being guaranteed issue, one can buy coverage AFTER they become sick.

Posted: Fri Apr 05, 2013 11:39 am Post Subject:

It's taken me some time to find the source of my mistake. Well, apparently Congress changed its mind after they wrote the law, and I missed it. So I stand corrected. The penalty amount in 2016 is $695, not $750.

The penalty is actually referred to as the "applicable dollar amount" and it is an ANNUAL amount, not a monthly amount. If an individual is not covered by a health plan that provides the "minimum essential coverage" in any month, the penalty is 1/12 the "applicable dollar amount". A person under age 18 pays 1/2 of the penalty. The maximum penalty for a household ("all individuals for whom the taxpayer is liable") is 300% (three times) the "applicable dollar amount" -- $285 in 2014, $1050 in 2015, and $2085 in 2016.

How many of you have read even one page of the actual PPACA? Forgive me for reading the law and not following up by reading the Internal Revenue Code. I don't suppose anyone else has ever made such a mistake. And I'm sure there will be a lot more confusion throughout the years ahead.

Here's what Congress wrote in the Act, HR 3590, found in Section 1501(b). The document comes from the US Government Printing Office and was the source of my information:

[Preamble]
An Act
Entitled The Patient Protection and Affordable Care Act.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Patient Protection and Affordable Care Act’’.
(b) TABLE OF CONTENTS.—The table of contents of this Act is as follows:
* * *
Subtitle F—Shared Responsibility for Health Care
PART I—INDIVIDUAL RESPONSIBILITY
Sec. 1501. Requirement to maintain minimum essential coverage.

[Section 1501.]
* * *
(b) IN GENERAL.—Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter:
‘‘CHAPTER 48—MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE
‘‘Sec. 5000A. Requirement to maintain minimum essential coverage.
‘‘SEC. 5000A. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.
‘‘(a) REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.—An applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month.
‘‘(b) SHARED RESPONSIBILITY PAYMENT.—
‘‘(1) IN GENERAL.—If an applicable individual fails to meet the requirement of subsection (a) for 1 or more months during any calendar year beginning after 2013, then, except as provided in subsection (d), there is hereby imposed a penalty with respect to the individual in the amount determined under subsection (c).
‘‘(2) INCLUSION WITH RETURN.—Any penalty imposed by this section with respect to any month shall be included with a taxpayer’s return under chapter 1 for the taxable year which includes such month.
‘‘(3) PAYMENT OF PENALTY.—If an individual with respect to whom a penalty is imposed by this section for any month—
‘‘(A) is a dependent (as defined in section 152) of another taxpayer for the other taxpayer’s taxable year including such month, such other taxpayer shall be liable for such penalty, or
‘‘(B) files a joint return for the taxable year including such month, such individual and the spouse of such individual shall be jointly liable for such penalty.
‘‘(c) AMOUNT OF PENALTY.—"
(1) IN GENERAL.—The penalty determined under this subsection for any month with respect to any individual is an amount equal to 1⁄12 of the applicable dollar amount for the calendar year.
‘‘(2) DOLLAR LIMITATION.—The amount of the penalty imposed by this section on any taxpayer for any taxable year with respect to all individuals for whom the taxpayer is liable under subsection (b)(3) shall not exceed an amount equal to
300 percent the applicable dollar amount (determined without regard to paragraph (3)(C)) for the calendar year with or within which the taxable year ends.
‘‘(3) APPLICABLE DOLLAR AMOUNT.—For purposes of paragraph (1)—
‘‘(A) IN GENERAL.—Except as provided in subparagraphs (B) and (C), the applicable dollar amount is $750.
‘‘(B) PHASE IN.—The applicable dollar amount is $95 for 2014 and $350 for 2015.
‘‘(C) SPECIAL RULE FOR INDIVIDUALS UNDER AGE 18.—If an applicable individual has not attained the age of 18 as of the beginning of a month, the applicable dollar amount with respect to such individual for the month shall be equal to one-half of the applicable dollar amount for the calendar year in which the month occurs.
‘‘(D) INDEXING OF AMOUNT.—In the case of any calendar year beginning after 2016, the applicable dollar amount shall be equal to $750, increased by an amount equal to—
‘‘(i) $750, multiplied by
‘‘(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting ‘calendar year 2015’ for ‘calendar year 1992’ in subparagraph (B) thereof. If the amount of any increase under clause (i) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.

Posted: Fri Apr 05, 2013 02:51 pm Post Subject:

Thanks for the correction.

Posted: Mon Apr 08, 2013 01:55 am Post Subject:

You're welcome.