Last year, Gonzalo Lopez Garcia missed the enrollment period for the medical insurance mandated under the Affordable Care Act (ACA), commonly referred to as “Obamacare.”
That will cost him a $325 penalty on his 2016 tax return for not having health coverage in 2015. And there’s a $162 penalty this year for every child listed in tax returns who does not have health insurance.
This year before the 2016 open enrollment period — which began back on Nov. 15 — ends on Sunday, Jan. 31, Garcia said he wouldn’t make that mistake again.
“One of the main things, because I wanted medical insurance, is because I have a lot of health issues I want to take care of and I also want to avoid the penalty (for next year),” Garcia said while completing forms at Only Insurance Solutions located in Van Nuys to enroll in health plans offered through Covered California, the state insurance marketplace set up through Obamacare.
It will cost those without health insurance even more this year, and again in 2017. This year the tax penalty increases to $695 per adult (and $347 for a child), totaling $2,500 per family or 2.5 percent of their annual income, whichever is higher. These penalties will increase again in 2017.
ACA requires that all US citizens or permanent residents not receiving medical benefits through their work purchase their own insurance. The Internal Revenue Service reported that 7.5 million Americans paid a total of $1.5 billion in Obamacare penalties on their 2015 tax returns for failing to obtain insurance in 2014.
Only Insurance Solutions helped Garcia get coverage for $50 a month, thanks to a subsidy he received due to his income. The 20-year-old kinesiology student at California State University Northridge (CSUN) has two jobs, but his wages are low.
The $50 monthly price is something he can afford, he said.
“I rather have the insurance, not pay the penalty, and get all the benefits,” Garcia noted.
Sticker Shock
People who don’t have health coverage through their work, and did not buy it on their own, are having “sticker shock” when they prepare their 2016 taxes and discover they owe $325 or 2.5 percent of their income (whichever is higher) for making that decision.
Every dependent you include on your taxes must have coverage as well.
“For a lot of people, it makes more sense to get health coverage than to pay the penalty,” said Johnny Baca, general manager of Only Insurance Solutions. “You pay less and have health coverage, which is better than not having it, and you don’t pay the fine.”
That’s because the government can provide a subsidy to cover the cost of coverage, depending on your income.
For example, a family of two adults and two children — with an income of $34,000 a year — could pay $57 a month for the basic health plans for the two adults (the children would be covered by Medi-Cal), which amounts to $684 per year.
A big savings compared with the 2016 penalty of $1,390 for the two adults for not having coverage.
Medical Troubles
Two years of paying a tax penalty for not having insurance ($91 last year and $325 this year), along with the risk of being unprepared for a major medical emergency, convinced Van Nuys resident Luis Figueroa to enroll.
“One of my friends had a problem with his appendix, and when they took him to a hospital they didn’t want to help him because he didn’t have insurance,” Figueroa said.
The 45-year-old driver for an international courier had relied on clinics for his medical needs for the past 10 years, after he was laid off from another company where he received health benefits.
Figueroa initially didn’t want to sign up for the Obamacare health plans because, he said, people told him it didn’t work and found the cost prohibitive.
Although he earns minimum wage, Figueroa will only pay $30 a month for his coverage, thanks to subsidies.
“It’s worth it,” the Van Nuys resident said. “Now that the penalty has gone up and will keep rising, it’s better to be insured. Besides, you need it, it’s indispensable.
“I’m on the streets all the time, and one never knows what could happen.”
Those who enroll for health coverage before the Jan. 31 deadline can start using their health plan on March 1.
To sign up for an ACA health plan before the deadline, visit covered.com for a listing of available carriers and rates.