Health insurance is extremely important and it provides a priceless peace of mind that allows people to carry on their lives without worrying about “what-if” scenarios. Coupled with the Obamacare mandate requiring everyone to get health insurance, more people are signed up for coverage now than there had been for years before healthcare reform. However, some people still decide to forgo insurance and may be wondering what will happen if they do not sign up for Obamacare.
For most of you who do not sign up for an Obamacare plan the government will charge a penalty that will be taken out of your tax return. For 2016 the penalty is either 2.5% of your annual income or $695 per person, whichever amount is higher.
It is obvious that the ACA is trying to make it very hard for you to avoid signing up for a qualified policy; however there are several different ways to avoid these fines, known as exemptions — as it reads on healthcare.gov, almost any financial hardship that you may have taken on anytime throughout the year could qualify you for an exemption.
Most plans that are considered Obamacare (and therefore are indeed qualified policies) will be purchased on a health insurance marketplace either through the federal government’s website, healthcare.gov, or through a state provided marketplace (only a few states have their own marketplace, most use the federal government’s). However, since Obamacare plans are actually insurance provided though the private companies, like Blue Cross Blue Shield or United HealthCare, they can also be purchased directly from the insurance carriers. Most carriers offer other types plans that are not considered qualified coverage; short term polices are the most common example.
Examples of policies that are not considered qualified coverage:
- Short term plans
- Dental or vision plans
- Accidental policies
- Workers Compensation
- Plans that only offer discounts
Also, there are plans offered in the same category as Obamacare plans called Catastrophic Plans. These are typically listed alongside the Bronze, Silver, Gold and Platinum plans and are usually cheaper than even the Bronze plans. Catastrophic Plans are only qualified coverage for individuals under the age of 31. If you are 31 or older you can still sign up for these plans but you may be subject to the penalty as if you did not have insurance.
Particularly if you are a healthy individual, you will often find that signing up for a short term plan is significantly cheaper than an Obamacare plan, even after factoring in the cost of the penalty for not having qualified coverage. Luckily, short term medical plans have begun offering outstanding levels of coverage.
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