It's not too late to sign up for Obamacare

But if you wait much longer you could face a fine

Published: January 21, 2015 06:30 PM

It’s still not too late to sign up for insurance in your state’s marketplace. Open enrollment for Obamacare continues until Feb. 15. Meet that deadline, and you will be insured on March 1, with no penalty.  

And if the plan you purchased in 2014 plan was automatically renewed on Jan. 1, you can still change your mind, comparison shop, and pick a new policy in February. And there are lots of good reasons to to shop around, as plans change from year to year.

Even better news: It’s not too late to apply for a tax credit that can help slash premiums. This year, nearly 9 out of 10 people who purchased insurance in state marketplaces have qualified for financial assistance. Last year, tax credits cut the average premium by 76 percent—to just $82 per month. Almost half of those who received subsidies wound up paying $50 or less. See if you might qualify for a subsidy.

Who has to pay fines?

Even if you don’t have insurance in January and February, you won’t have to pay a fine as long as you sign up for health insurance by Feb. 15. That will in time to start coverage by March 1. (That insurance could come from a government program such as Medicare, Veteran's Affairs (VA) coverage, or the Children’s Health Insurance program (CHIP).  

Insurance through an employer counts, too, provided the plan offers free preventive care. 
Most policies offered by employers meet that standard—but not all. Some have tried to offer plans that don't include hospitalization. Three months ago the Department of Health and Human Services ruled that these plan will not qualify. The employee cannot be fined, but because his employer is offering sub-standard insurance, the employee is free to buy coverage in his state marketplace where he can apply for a subsidy.

Or the insurance could come through your state marketplace. Any plan you buy there will meet the minimum insurance requirements.

Even if you don't have insurance, though, you migh be able to avoid a fine if you qualify for one of the many exemptions that are built into the Affordable Care Act.

How high are the fines?

Depending on your income, you will either pay a flat dollar amount or a percentage of your income above what the Internal Revenue Service calls your “filing threshold”—roughly $10,000 for an individual, $20,000 for a couple. But because the government would much rather have you sign up for insurance than pay a fine, it caps penalties at the national average for a "Bronze" plan in the state marketplaces, the least expensive option, hoping that will encourage people to sign up for coverage.

The penalties will be getting steeper in 2015, however. Families that were uninsured in 2014 will, come tax time, pay the higher of either 1 percent of their income above their “filing threshold” or $95 per adult and $47.50 per child (up to a maximum of $285).

In 2015, however, that jumps to the higher of either 2 percent of income over those thresholds, or $325 per adult and $162.50 per child (up to a maximum of $975 for a family of three or more).

So an uninsured family of two adults and two children who earns $70,000 would have to pay a fine of about $500 in 2014 but $975 in 2015.

How will the fine be collected?

If you were uninsured in 2014, the IRS will deduct the fine from any tax refund that you might expect this spring. If you’re not due a refund, don’t worry: The IRS won’t come after you or throw you in jail, as you may have heard. Instead, they will just wait until the next year (or the year after that), subtracting fines from any future refunds.

Read more about how to apply for, select, and use health insurance, including Medicare. And use our health insurance rankings to compare health insurance plans in your area.

Is it a better deal to pay the fine or buy insurance?

To find out, you’ll want to compare your possible fine and insurance premium—and consider what you get in return for your premium. To make that determination, take these steps:

1. Use the Turbotax calculator to estimate how much your family will owe if you don’t buy insurance by Feb. 15. (Just type in your age, size of your household, income, and ZIP code.)

2. Use the Kaiser Family Foundation’s calculator to see if you would qualify for a subsidy, and what you would pay for a silver plan (the most popular Obamacare plan) where you live. (The calculator also offers information on the less-expensive bronze plan.)

3. Compare the penalty to the premium. If you are young, you may find that the premium is almost the same or even lower than the penalty, in which case the choice is no-brainer. But even if the premium is more, consider: Do you want to pay the fine, and get nothing in return, or buy insurance through Obamacare and receive free preventive care (including screening, shots, and contraception), plus a long list of covered benefits

—Maggie Mahar

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