A penalty for no health insurance came when the Affordable Care Act (ACA), known as Obamacare, took effect in 2014. Under this law, if you do not have at least the minimum essential coverage, you may owe a tax penalty known as the shared responsibility payment. All of this is about to change starting January 1, 2019, when the tax penalty will be revoked. You will not be penalized if you do not have major medical health insurance for 2019.
What the repeal means
The tax penalty might go away, but the major medical insurance remains the best option, especially for those who need comprehensive benefits, want a policy that complies with the ACA, or need guaranteed issue coverage because of health history or some pre-existing conditions.
Two types of health coverage to consider
- Short-term medical insurance
This is temporary health insurance for people who are between major medical policies. These plans include a wide range of benefits for catastrophic medical expenses. Some plans include a few preventive care benefits. All of the benefit amounts and limits depending on the plans. The plans last form 30 to 364 days.
- Hospital indemnity insurance
As fixed-benefit indemnity insurance, it is often known as a hospital indemnity plan. This insurance provides payments for hospital, surgical and critical illness expenses through fixed-dollar reimbursements.
What if you go without health insurance?
Some level of coverage should be your goal, despite no penalty. Consider a fixed-benefit indemnity plan or a short term medical plan, to help you if you experience unexpected illness or injury. Evidence does suggest that uninsured people are less likely to get healthcare than those who are insured.
Even if they do, they pay much more. Kaiser Family Foundation research found that 23% of people without insurance postponed their medical care because of cost, while only 9% on Medicaid or another public plan did it. Furthermore, 20% of people without insurance went without care because of its cost, compared to 8% of those covered with Medicaid.
You may have coverage options
Consider if you qualify for a special enrollment period to obtain an Obamacare plan, as well as for Medicaid, in which case you can enroll year-round. Some other year-round minimum essential coverage options are also possible, as we as job-based benefits within the next 3 months. If none of these is an option, qualify for an exemption to avoid tax penalty.
Do you qualify for an ACA exemption?
If you qualify, you will not owe the tax penalty. Examples of these include having a gross income below the minimum for filing a tax return, experiencing general hardship as homelessness, foreclosure, a death of a close family member, or unpaid medical bills, or being a resident of a state that did not expand Medicaid. Some ACA exemptions have to be claimed or reported when you file taxes, while others are automatic.
If you do not qualify, you are allowed a single period of three months without ACA coverage.
If you are recently unemployed but expect to find employment in the next couple of months, you can go without health insurance without the penalty.
Determining the tax penalty
You could be facing a tax penalty for anywhere from nine to twelve months.
For 2017, fees are 2.5% of your household income or $695 per adult and $347.50 per child under 18, or the maximum of $2,085, whichever is higher. The 2018 figures are not available as of yet.
The positive aspect is that an alternative health insurance option can help you to cover the high costs of a surgery or a hospital stay without the monthly premiums or deductibles.
Do not go uninsured; Get alternative insurance coverage
If you missed medical policies in 2018, alternative health insurance is not compliant with the ACA and therefore do not qualify as the minimum essential coverage. They do provide a range of benefits, however, mainly for unexpected medical care. Get a quote online and enroll since these plans are not subject to open enrollment.