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Open enrollment for 2018 plans ended December 15. If you missed your chance to enroll and don’t have health insurance, you may be wondering about the consequences, especially now that the Affordable Care Act’s individual shared responsibility payment (aka, the tax penalty) has been repealed.
Learn more about what the tax penalty repeal means and when it takes effect.
Consider the following. Do you qualify for:
A special enrollment period to obtain an Obamacare plan
Medicaid, in which case you can enroll year-round
Other minimum essential coverage options that are available year-round
Job-based benefits within the next 3 months, in which case you might want to consider short-term medical
If none of these options are available to you, you may still qualify for an exemption to avoid the tax penalty. Keep reading...
If you qualify for exemptions, you will not owe the tax penalty for going without minimum essential coverage.
Some examples of exemption-eligible circumstances include:
Having a gross or household income below the minimum threshold for filing a tax return
Experiencing general hardship due to circumstances such as homelessness, foreclosure, death of a close family member, unpaid medical bills and more
Being a resident of a state that did not expand Medicaid
Some Obamacare exemptions must be claimed or reported when you file your taxes. Others are automatic. More exemption information is available at IRS.gov.
Learn about all of the ACA exemptions.
While an exemption from participating in the ACA may feel like a relief, remember, it just means you’re not going be to obligated to purchase an Obamacare plan and will not owe a penalty.
Remaining uninsured still opens you up to the risk of medical bills in the event you need to access healthcare, and you could wind up paying these bills fully out of pocket.
The good news is there’s an affordable, convenient alternative health insurance option called a “fixed indemnity” hospital plan that can help with that. More on that below.
If you don’t fit the exemption criteria above, you are allowed a single period of up to three months without ACA-compliant health insurance coverage.
For example, if you’re recently unemployed but you expect to find employment within a couple of months and attain major medical at that time (either through your employer or a special enrollment period), you can technically go without health insurance temporarily without being penalized.
At this point, you may realize you’re facing a tax penalty for anywhere from 9 to 12 months.
Depending on your income and your employment outlook, this may not be all bad news as your combined tax penalty plus alternative medical insurance premiums and deductibles could cost you less out of pocket than obtaining a major medical policy.
First, the tax penalty: for 2017, these fees amount to either 2.5% of your household income or $695 per adult in your household, whichever amount is higher.
Though 2018 figures aren’t available yet, you can calculate your anticipated tax penalty here for 2017 to get a ballpark estimate. (The fee is adjusted for inflation each year.)
Once you know that number, you’ll want to ensure you can save enough money to pay that penalty when you file that year’s tax returns.
Now for the silver lining: An alternative health insurance option like a hospital indemnity plan can cover the high costs of a surgery or hospital stay without the budget busting monthly premium or deductible of a major medical policy.
Even if you missed out on a major medical policy for 2018, it’s still a smart move to obtain some level of medical coverage with a fixed-benefit indemnity plan (for longer than three months) or short-term medical plan (for three months or less).
Why? Well, there’s evidence to suggest that uninsured people are less likely to receive healthcare than their insured friends and family, and when they do, they pay more for it. Specifically, Kaiser Family Foundation research found that:
23% of people without insurance postponed medical care due to cost compared to only 9% of people on Medicaid or another public plan
20% of people without insurance went without needed care due to cost, compared to 8% of Medicaid recipients
People without insurance for an entire year pay for one-fifth of their care out of pocket and hospitals frequently charge uninsured patients much higher rates compared to those paid by private health insurers and public programs
The numbers don’t lie.
Health insurance dollars go much further than the dollars in your checking account should you actually need to use your plan. And a medical bill that you have to pay out of pocket will likely balloon your personal debt exponentially.
Alternative health insurance, like fixed benefit hospital indemnity plans, are not ACA-compliant and do not qualify as minimum essential coverage, however they do provide a range of benefits for unexpected medical care and often have premiums that are a fraction of major medical insurance premiums.
You can get a quote online today and enroll tomorrow since these plans aren’t subject to the open enrollment period.
Or contact a knowledgeable insurance advisor by calling the number on your screen to learn more about your options.
Need Medical Coverage for 90 Days or Less? Get a Short-Term Medical Quote Now.
Need Medical Coverage for More Than 90 Days? Get a Hospital Plan Quote Now.
Want to Speak to an Insurance Advisor? Locate an Agent Near You.
Originally posted January 25, 2016. Reviewed and updated March 13, 2018.
 IRS.gov. “Individual Shared Responsibility Provision – Exemptions: Claiming or Reporting.” Last revised or updated Jan. 14, 2016. https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions
 Healthcare.gov. “If you don’t have health insurance: How much you’ll pay.” Last reviewed or updated Dec. 12, 2017. https://www.healthcare.gov/fees/fee-for-not-being-covered/
 The Henry J. Kaiser Family Foundation. “Key Facts About the Uninsured Population.” Sep. 19, 2017. http://kff.org/uninsured/fact-sheet/key-facts-about-the-uninsured-population/