Calculate Obamacare penalty before declining coverage, broker advises
As seen on Market Watch.
By Russ Britt
If you’re thinking about simply foregoing health-care coverage this year and paying the Obamacare penalty, you might want to consider exactly what the penalty will be, says one insurance broker.
John DiVito, president of Flexible Benefit, a Chicago-based insurance wholesaler, points out the penalty for not having a health policy can be $95 but it won’t be that simple for the vast majority of the heretofore uninsured. The rule in the Affordable Care Act states that the first year for those going without coverage is either $95 OR 1% of income, whichever is greater.
That means a recent college graduate making somewhere around $40,000 a year could end up paying $400. Given the subsidies that are available, it might be worth looking into coverage, he adds. For those whose income puts their penalty at $95 or less, it still might be worth looking into getting coverage.
“If it’s $95 or less, you’re practically at the Medicaid level,” he said. In 2015, that minimum penalty jumps to $695, or 2% of income. For 2016, it’s 2.5%.
DiVito says consumers need to consider a number of options when shopping for insurance, not just the public exchanges. While public exchanges are necessary for those seeking subsidies, private exchanges or dealing directly with insurers themselves can save more on premiums and deductibles. He points out in Illinois, there are 20 carriers on the public exchange but 35 on private exchanges.
“I think people need to shop both on and off the exchanges,” he said.