IQ expert Jason Beans: Without mandated health insurance, you still may pay the price
Q: What will the penalty be if I don’t get health insurance as mandated by President Obama’s federal health care reform law?
A: Americans who do not have health insurance by 2014 will face financial penalties. The penalty will be $95 or 1 percent of a person’s income, whichever is greater. The penalties are in full swing two years later, with fines increasing. By 2016, the annual penalty for someone who doesn’t have health insurance will be $695 a person and $2,085 for a family, or 2.5 percent of income, whichever is greater.
This penalty will increase every year based on cost-of-living costs and will be imposed like a tax. If you don’t pay the penalty, the government could go after your tax refund for payment.
There are some exceptions, however. Someone is exempt if he or she:
▪ Carried coverage for at least nine months out of the year.
▪ Experienced financial hardship — falling short of income requirements, with the cheapest insurance costing more than 8 percent of annual income.
▪ Is in prison.
▪ Has religious reasons for not having coverage.
▪ Is a member of a Native American tribe.
You can take a look at Massachusetts, the only state that requires coverage, to see how many people have been paying a lack-of-insurance penalty.
In 2008, Massachusetts reported fining 45,000 taxpayers, penalizing them up to $1,100 a person. Today, the least expensive health insurance plan in Massachusetts runs about $200 a month for some age 27 years and over, making three times the federal poverty level (roughly $32,500). A lack-of-insurance fine for that same person would be about half that cost, or $101 a month. While most people would like to have health insurance, some people may want to save some money by just paying the penalty.
If you can’t afford coverage under the health care reform law, you may qualify for Medicaid, the government insurance program for poor and disabled Americans. Eligibility kicks in when your income does not exceed $14,404 for one person (133 percent of the federal poverty level) or $29,326 for a family of four.
If health care reform does take effect as planned, then we’ll definitely see some expansion of Medicaid. If you make too much money for Medicaid eligibility, but still don’t think you can afford health insurance, you may qualify for government subsidies for private insurance.
However, all of this may be a moot point, depending on what the U.S. Supreme Court decides. The Supreme Court will hear arguments in March 2012 regarding the health care reform law. Following the court hearing, the justices could retain the law, reject the individual insurance mandate or other provisions, or invalidate the entire law. Stay tuned to find out whether the federal penalties for not having coverage will remain part of the health care equation.
Jason Beans is CEO of Chicago-based Rising Medical Solutions, a medical cost containment/care management company serving the workers’ compensation, group health, auto and liability markets. Beans founded Rising in 1999. Since then, Beans has received a number of honors, including Business Council Advisory Man of the Year and Midwest finalist for Ernst & Young Entrepreneur of the Year. Rising has appeared several times on the Private Company Index’s Top 10 Growth list and Inc. magazine’s Inc. 5000 list.
Beans earned a master’s degree from MIT’s Entrepreneurial Masters Program and a bachelor’s degree in finance from Boston College.
For more information, visit www.risingms.com.
If you have a health insurance question for Jason Beans, please send it to email@example.com.