With the deadline to sign up for health insurance only two weeks away, just 4.2 million Americans have enrolled in a policy, according to the Department of Health and Human Services.
If you’re one of the millions who still don’t have coverage, this is what you need to know.
When is the deadline?
Under the Affordable Care Act, also known as Obamacare, Americans must sign up and pay for health insurance by March 31, 2014 or face a possible tax penalty.
How much is the penalty?
If you fail to secure a health insurance policy before the deadline, you will pay $95 or one percent of your income – whichever is higher – on next year’s tax return. There is also a penalty $47.50 for every uninsured child under the age of 18 with a maximum penalty of $285 per family.
Is anyone excused from paying the penalty?
In most, but not all states, anyone who has an income that is less than 100 percent of the Federal Poverty Level, or FPL, will not have to buy health insurance and will not pay a penalty.
The FPL is defined by the government as the minimum income threshold required for basic needs such as food, shelter and transportation. If you make less than 100 percent of the FPL, health insurance is considered unaffordable for you but you might qualify for other types of government assistance including some health care programs. In most states, if you make between 100 and 400 percent of the FPL you are eligible for tax credits to help pay for a health insurance policy.
What type of health insurance do I need to avoid the penalty?
Most Americans need to purchase a qualified plan that covers the “minimum essential benefits” which includes things like maternity and newborn services, emergency care and prescription drugs. There are some notable exceptions. Grandfathered plans in place before March of 2010 don’t have to follow the rules. Neither do most employer, COBRA or military plans. If you have Medicare you’re also excused from paying a penalty and the same is true for most Medicaid policies. Anyone under 30 can still carry a catastrophic plan that offers bare minimum coverage.
Once the deadline has passed can I still buy insurance?
Unless you have what’s known as a “qualifying event” you’ll have to do without insurance until the next sign up period which begins on November 15, 2014. A qualifying event, like switching jobs, having a baby or moving out of state, allows you to buy a plan during a 60-day “special enrollment” period.
Is it cheaper to pay the penalty?
Believe it or not, depending on where you live and how much money you make, it’s actually cheaper to buy insurance than pay the penalty, according to Ivan Williams a senior policy advisor with the certified insurance marketplace, Get Insured.
For example, if you are a 26-year-old singleton living in Greenville, Ky. and you make around $20,000 a year, the tax credits you receive completely offsets the cost of your insurance premiums for a Silver level plan -- so your policy costs you nothing.
“For some ages and income groups, this is true or close to true in other parts of the country too,” Williams said.
Price of premiums aside, Williams said you also have to factor in the cost of healthcare if you decide to forego insurance. Even someone under the age of 26 who falls into the "young and invincible" category still has a one in ten chance of racking up at least $13,000 worth of medical bills this year, he said.
So how do I sign up?
For online sign up, go to healthcare.gov, your state’s marketplace or a certified insurance website like Get Insured, ehealth or Go Health Insurance. You can also purchase plans from a certified broker over the phone or in person. But do it now. It definitely takes more than 15 minutes to complete the sign up process.