I’m Not Buying It and You Can’t Make Me

I keep hearing news clips and reading articles about the younger generation and what savvy shoppers they are. Healthcare reformers are worried that the savvy shopping trend will continue into 2014 even with the new Patient Protection and Affordable Care Act (PPACA, ACA, or Obamacare) health insurance requirements. That generation’s argument is, “Why should I pay thousands of dollars for health insurance that I don’t need when I can pay a $95 penalty instead for not having it? Do the math.” Well, that may seem all fine and dandy but let’s do the numbers.

Under the ACA, in 2014, the first year’s penalty per adult is $95 OR 1% of your family income (and $47.50 per child, up to $285 for a family). Let’s say you make $25,000/yr. One percent of that is $250. So, now you are actually paying a $250 penalty instead of $95. In 2015, the penalty rises to $325 PER adult (and $162.50 per child, up to $975 for a family) OR 2% of family income (whichever is HIGHER). And, in 2016, the penalty is $695 PER adult (and $347.50 per child, up to $2,085 for a family) OR 2.5% of the family income (whichever is HIGHER). So, in 2015, for a single adult making $25,000 the penalty would be $500 (2% of $25,000) and by 2016, the penalty would be $695 ($625 equals 2.5% of $25,000).

Ok, so you still aren’t convinced that even with the $695 ‘price tag’ in 2016 that purchasing health insurance is the way to go. Let’s add two doctor visits at $100 each and monthly medication at $50/month. That adds an additional $800 to your yearly health costs. The total is now $1,495. Are you comfortable with that number? What if you get strep throat and end up at the local urgent care and you are given a prescription for antibiotics? What if you break your arm? Add a few thousand dollars to your current health bill. You can see where costs can add up quickly and very unexpectedly even with things as simple as strep throat, stitches or a sprained ankle. Do you really want to take the risk? Are you willing to play roulette with your health?

Purchasing health insurance doesn’t have to be a bad idea. Let’s look at one more area of the ACA. Depending on your income (or your total family income), you could be eligible for assistance with your health insurance premium. Got your attention yet? This assistance is referred to as premium tax credits. The amount of credit you get is based on your income in relation to the federal poverty level (FPL). The table below (Dept of Health and Human Services) shows the FPL for 2013 for all states (excluding Alaska and Hawaii) and the District of Columbia.

Household Size 100% FPL 133% 150%200% 300% 400%

215,510 20,62823,265 31,02046,53062,040

319,530 25,97529,295 39,06058,59078,120
423,55031,32235,325 47,10070,65094,200
527,570 36,66841,35555,14082,710110,280
631,590 42,01547,38563,18094,770126,360
735,610 47,36153,41571,220106,830142,440
839,630 52,70859,445 79,260118,890158,520
For each additional person, add$4,020 $5,347$6,030$8,040$12,060$16,080

Those making less than 133% of the FPL will be eligible for Medicaid. Those making up to 400% of the FPL would be eligible for premium tax credits which would offset the health premium costs. One can only qualify for premium tax credits by purchasing their health insurance through the new health insurance marketplace (or exchange). Note, however, there are some restrictions on who can purchase through the Exchange. Those individuals who have employer-provided health insurance and those who qualify for Medicare are not eligible for premium tax credits.

So, all you savvy shoppers, before you discount the need for health insurance, check out if you qualify for premium tax credits, add up your potential health care costs, and the risks involved without it…..and then do the math.

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