Health Law Tax Penalty? I’ll Take It, Millions Say

[WestVirginiaRebel]

NY Times:

WASHINGTON — The architects of the Affordable Care Act thought they had a blunt instrument to force people — even young and healthy ones — to buy insurance through the law’s online marketplaces: a tax penalty for those who remain uninsured.

 

It has not worked all that well, and that is at least partly to blame for soaring premiums next year on some of the health law’s insurance exchanges.

 

The full weight of the penalty will not be felt until April, when those who have avoided buying insurance will face penalties of around $700 a person or more. But even then that might not be enough: For the young and healthy who are badly needed to make the exchanges work, it is sometimes cheaper to pay the Internal Revenue Service than an insurance company charging large premiums, with huge deductibles.

 

“In my experience, the penalty has not been large enough to motivate people to sign up for insurance,” said Christine Speidel, a tax lawyer at Vermont Legal Aid.

 

Some people do sign up, especially those with low incomes who receive the most generous subsidies, Ms. Speidel said. But others, she said, find that they cannot afford insurance, even with subsidies, so “they grudgingly take the penalty.”

 

The I.R.S. says that 8.1 million returns included penalty payments for people who went without insurance in 2014, the first year in which most people were required to have coverage. A preliminary report on the latest tax-filing season, tabulating data through April, said that 5.6 million returns included penalties averaging $442 a return for people uninsured in 2015.

 

With the health law’s fourth open-enrollment season beginning Tuesday, consumers are anxiously weighing their options.

 

William H. Weber, 51, a business consultant in Atlanta, said he paid $1,400 a month this year for a Humana health plan that covered him and his wife and two children. Premiums will increase 60 percent next year, Mr. Weber said, and he does not see alternative policies that would be less expensive. So he said he was seriously considering dropping insurance and paying the penalty.

 

“We may roll the dice next year, go without insurance and hope we have no major medical emergencies,” Mr. Weber said. “The penalty would be less than two months of premiums.” (He said that he did not qualify for a subsidy because his income was too high, but that his son, a 20-year-old barista in New York City, had a great plan with a subsidy.)

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Paying not to play.