According to the provisions of the Affordable Care Act, as of January 1, 2016, most Americans are required to have health insurance or pay a penalty of up to 2.5 percent of their total household income to the IRS. Nonetheless, according to Obama administration sources, about 10.5 million adults who were eligible for health insurance coverage remained uninsured as of fall 2015.
According to some of those who have chosen to pay the penalty rather than purchase health insurance, the decision makes financial sense. Susan Reardon, 61, of Kalamazoo, Michigan, for example, said in an interview with the NY Times that after calculating the cost of the cheapest plan available to her, which included a $500 monthly premium and a $6,850 deductible, she was most likely going to forgo health insurance this year. Like many others, she believes it will be cheaper to pay out of pocket for her doctor visits and medications, even after paying the approximately $1,500 penalty.
And if something catastrophic occurs?
“I feel like it’s better just to die,” she said.
High Deductibles A Barrier to Health Insurance
For many Americans, it seems that high deductibles rather than monthly premiums are the biggest obstacle to being insured. Said Tim Fescoe, a California resident who purchased health insurance on the state’s healthcare marketplace, Covered California, in 2014, “It literally covered zero medical expenses,” because the policy included a $6,000 deductible for both him and his wife. As a result, they opted to drop their insurance and pay the penalty in 2015.
The cost of going uninsured is going up this year, to $695 per adult family member or 2.5 percent of the total household income, from $325 per adult or 2 percent of the household income in 2015. Nonetheless, according to an analysis by the Henry J. Kaiser Family Foundation, about 7 million Americans would pay less in penalties than they would for the cheapest insurance available to them on the federal health insurance exchange. Furthermore, over half would not qualify for subsidies because their incomes are too high.
Going Without Health Insurance — A Big Risk
Going uninsured is a big gamble, however. According to the Health Care Cost and Utilization Project of the federal Agency for Healthcare Research and Quality, there were 36.5 million hospital stays in the United States in 2012, which averaged four and a half days and cost about $10,400 each. Nearly 50 percent of those hospitalizations involved Americans between the ages of 18 and 64 — the demographic that is most likely to skip health insurance coverage in the hopes of staying healthy.
What’s more, participation in the health insurance marketplace by the majority of Americans is a prerequisite for the long-term viability of the Affordable Care Act , according to insurance industry experts. Younger, healthier people offset the high cost of caring for the sicker, older patients who have already signed up.
Whether higher penalties will encourage that increased participation remains to be seen. According to administration sources, about 2.5 million new enrollees purchased health insurance on the federal exchange since open enrollment began on Nov. 1, 2015 — a 29 percent increase over last year at this time.
Open enrollment for this year ends Jan. 31, 2016.
Health insurance decisions are complex and difficult, and making a bad choice can spell financial ruin for you and your family. So don’t try to navigate the system alone. Our health insurance experts will provide you with sound advice and guide you through the process. Just call us at 516-292-3780 any weekday between 9 a.m. and 6 p.m. ,or request a free consultation online now.