Going Without Health Insurance in 2015? Here's What It'll Cost You

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The ACA. Obamacare. The Affordable Care Act. Whatever you call it, your finances will almost certainly be affected by it, especially if you choose not to be covered by an approved plan in 2015. While many taxpayers are just now starting to feel the pinch of opting out in 2014, the penalties for this year are much stiffer. 

Here's what you need to know

How Much Are the Fines?

Straight from the HealthCare.gov website, the penalty or "tax" for 2015 is either:

• 2% of your yearly household income over the tax filing threshold (usually anything over $10,000 for an individual); or
   
• $235 per adult and $162.50 for each child under 18.

The government wants you to pay the higher of the two amounts, but the maximum for option one can't exceed the "national average premium for a bronze plan." Just what is that number? For 2014, the average was $204 per person per month or $1020 per month for a family of five or more. The national average for 2015 won't be known until the end of 2015, but the Washington Times states it could increase by as much as 14% in some parts of the country.

The maximum for option two can't exceed $975.

How Are the Fines Paid?

Since the healthcare law is enforced strictly through the IRS, it's quite simply a "tax" thing. If you don't make enough to file (under $10,000 in most cases), you wouldn't pay a fine, anyway. If you do file, you'll have a place to indicate your penalty on your return, and that amount will come off your refund (or you'll have to pay in, like any other tax owed). All major tax filing software services have been updated accordingly to help you fill out the right forms and make paying the fine just a part of the tax process.

Can I Get Out of the Fine?

In a word: yes. But it may take some work. People covered by an ACA or another plan that is considered "minimum essential coverage" don't have to pay.

Others are exempt from fine if they had coverage for more than nine months of the year, are a member of a federally recognized tribe, have coverage through a health care sharing ministry, or have religious objections to insurance (including Medicare and Social Security). You can also avoid fines if you are in jail during most of the year or aren't in the U.S. lawfully or face certain financial hardships.

What If I Can't Afford Insurance or the Fine?

If the lowest-priced coverage would cost more than 8% of your household income, you can get an exemption. Additional examples of hardship that may qualify for an exemption include:

1. Being homeless;
2. Eviction or foreclosure;
3. Facing shut-off from your utility company;
4. Experiencing domestic violence;
5. Experience the death of a family member;
6. Suffering substantial loss due to a fire, flood, or other natural or human-caused disaster;
7. Filing for bankruptcy;
8. Being unable to pay medical expenses that resulted in substantial debt;
9. Experiencing increases in necessary expenses due to caring for an ill, disabled, or aging family member.

There are also exemptions that can be granted due to changes in your state's Medicaid and CHIP programs, cancellation of your individual policy, and your difficulty in getting insurance.

Note that all of these require you to fill out an application that can take weeks or months to approve. In the meantime, if you fail to get covered and your application is denied, you will still be held liable for any penalties earned during that time. It's is also suggested that you don't wait until the end of 2015 to apply for the exemption if you have proof of hardship now.

Should I Ever Choose to Pay the Fine?

That's really a personal decision, but I will say that there have been instances where you may owe less by simply paying fines. If you are a healthy adult that can get approved for a traditional pre-ACA plan without pre-existing conditions, you may be eligible for a short-term plan. These plans don't offer some of the benefits required by Obamacare, including maternity coverage or certain free preventative services. They are, however, more in line with pre-ACA pricing for premiums, and many have much lower deductibles and premiums than the subsidized plans offered on the exchange. These plans are good for three to 12 months and make you subject to ACA fines, but may still cost less after fines than better plans on the exchange.

All of this will change again in 2016, with another increase in fines, so you'll need to stay abreast of developments. With open enrollment ending soon, however, whatever choice you make should be done without delay.

Will you get insurance or pay the fine this year?