You Might Pay A Lot More Than $95 For Skipping Health Insurance : Shots - Health News Sure, you thought, I can avoid buying health insurance because the tax penalty is just $95. But some people may be on the hook for thousands of dollars more.
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You Might Pay A Lot More Than $95 For Skipping Health Insurance

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You Might Pay A Lot More Than $95 For Skipping Health Insurance

You Might Pay A Lot More Than $95 For Skipping Health Insurance

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Four point two million - that's how many people had signed up for insurance through the Affordable Care Act's health exchanges as of the end of February. The Obama administration released those numbers, and announced they will not be extending the March 31st deadline for people without insurance to sign up.

Those who don't act might be in for a rude surprise. There's been this assumption that the tax penalty for missing the deadline would be minimal. It's actually bigger than many people realize, as NPR's Julia Rovner reports.

JULIE ROVNER, BYLINE: Because the law and the requirement for most people to have health insurance is so new, Congress started out with a penalty that's relatively small. But it's actually not as small as the $95 that so many people, including many in the media, have been citing.

Brian Haile heads health policy for the tax firm Jackson Hewitt.

BRIAN HAILE: I'd say the vast majority of people that I've dealt with really believe that the penalty is only $95, if they know about it at all. And when people find out, they're stunned. It's much, much higher than they would expect.

ROVNER: In fact, says Linda Blumberg of the Urban Institute...

LINDA BLUMBERG: The penalty is the maximum of either $95 or 1 percent of taxable income in 2014. For people with higher incomes, it can be much more sizable than $95.

ROVNER: Blumberg says even for people with more moderate incomes, it's important to remember that the flat-fee penalty will be assessed for every family member who lacks health coverage.

BLUMBERG: And so if it's a two-adult household and both are uninsured, it's twice $95, $190. And then if there are any children in the family that are uninsured, then the penalty for each of them is half of the $95.

ROVNER: The flat-fee penalty maxes out at $285 next year, but even if most of the family has insurance, just one uninsured member can trigger the penalty, says Haile.

HAILE: If you've got someone that comes home to live, it could cost you much more than a spare bedroom. If you claim that child or could claim that child as a dependent, then you suddenly become liable for penalties if that child lacks minimum essential coverage.

ROVNER: The 1 percent penalty, for those hit with that, also has a cap, but the penalty can still get pretty big. The cap is tied to the cost of the national average, bronze-level insurance plan. This year's top penalty could be about $3,600 for an individual, and $11,000 for a family of four.

Now, there's something else that most people don't realize, Haile says, and that's if you're uninsured and earn enough to be potentially liable for penalties, you have to sign up for coverage by the end of this month.

HAILE: Your only chance to buy insurance, unless you have a special qualifying event, is during this open enrollment period, which makes March 31 an incredibly important date for avoiding the penalty. If you want to avoid the penalty, you need to get in and sign up for coverage now.

ROVNER: Now, that's much different from how things were before the law's implementation. But the Urban Institute's Linda Blumberg says it's due to the new rule that protects people with pre-existing health conditions.

BLUMBERG: Now, the insurance companies can't say no, even if you've had serious health problems in the past or have a serious health problem today. They can't deny you. And because of that, people are restricted to obtaining coverage during the open enrollment period, or during some other situation where they've had a change in their family status or their income.

ROVNER: Indeed, changes to family status - a birth, divorce or job change - will allow you to buy or change your coverage outside the open enrollment period. And if you're eligible for Medicaid or your kids are eligible for the Children's Health Insurance Program, you can sign up anytime. There are also lots of exemptions from the penalty itself, Blumberg points out, even for people who remain uninsured.

BLUMBERG: The biggest being having income below the tax filing threshold.

ROVNER: This year, that's $10,000 for a single person and just under $13,000 for a head of household. If you don't have to file income taxes, you won't have to pay a penalty. You can also get an exemption if the cheapest available insurance would cost more than 8 percent of your income, if you have unpaid medical debt, or for any of several other reasons listed on the website.

But for most people with incomes above the poverty line, time is running out to either get insurance or prepare to pay up instead. Julie Rovner, NPR News, Washington.

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