As Open Enrollment season gets underway, one of the most common questions we hear is, “Do I need to enroll in a health insurance policy?” The answer to that question might seem obvious to most people: Yes, enrolling in health insurance will help you afford the health care you need, and protect your family in case of serious illnesses or accidents.
But beyond that obvious reasoning, there is one more important factor to consider. The Individual Mandate, or the part of the Affordable Care Act that states most people must enroll in a health insurance plan, specifies a penalty for failing to do so.
For the past two years, this penalty was set at relatively low levels. Many people chose to pay the fine rather than enroll in a health insurance policy. But in 2016, the penalty is set to increase dramatically. That means when you file your federal income tax return in spring of 2017, you could be facing a stiff penalty that negates your tax refund or even causes you to owe money to the IRS.
How much is the Individual Mandate penalty? If you fail to enroll in a health insurance plan for 2016, your fine will be calculated as follows:
- $695 per uninsured adult in your household, plus
- $347.50 per uninsured child in the household
- 2.5percent of the household’s income – whichever is higher
For example, a family consisting of two adults and two children would be charged a minimum penalty of $2,085 dollars, if they fail to enroll in health insurance or drop their current plan. Or, if 2.5 percent of their income results in a higher fine, they will pay that amount.
Remember, Covered California operates their annual Open Enrollment period between November 1 and January 31. If you need help applying for health insurance coverage, have questions about the different types of plans available, or have any other concerns, please call our office. Our health insurance experts can point you in the right direction!