Wednesday, November 25, 2015

Ignoring Obamacare

Barack Obama signing the Patient Protection an...
Barack Obama signing the Patient Protection and Affordable Care Act at the White House (Photo credit: Wikipedia)
Since it was first introduced, Obamacare, formally known as The Patient Protection and Affordable Care Act, has been quite controversial. While Americans who oppose the plan have found much to be mad at, the biggest bone of contention is the fact that all Americans are required to have qualifying health insurance coverage under threat of facing a hefty penalty

Some people have ignored this mandate, penalty and all, simply because they don’t agree with Obamacare. Others, however, have heard that there’s little enforcement for collecting the penalty, which is true in some cases, and have thus not bothered to get coverage.

However, nothing is ever foolproof, and, in certain circumstances, there could end up being a pretty big chance that you’ll have to pay the penalty if you don’t get approved coverage pronto!

The penalty can be applied to anyone who doesn’t have the required minimum essential coverage and who doesn’t file for an exemption. Exemptions are extended to those who would have to pay more than 8.05% of their household income to secure health insurance, who have recently filed for bankruptcy, who have a lot of unpaid medical bills, who are homeless, who have recently suffered the death of a love one, who are victims of domestic violence, who are caregivers to eligible family members, or who have been through a natural disaster.   

If you don’t fit into one of the exemption categories mentioned above, you could face a $325 penalty as well as a penalty of $162.50 per uninsured child. There are still some exceptions and loopholes however, and some exceptions, such as having a higher tax filing threshold, could end with you paying even more in penalties!

Actually collecting those penalties, however, is where things get tricky. See, the IRS doesn’t have much power when it comes to enforcing the penalties. It can’t file a notice of a tax lien or attach a lien to any accounts, nor can it impose other penalties or start criminal proceedings. What it can do, however, is take the money out of your tax refund or keep accruing fees until you qualify for a refund.

If you don’t want to risk losing your refund or losing it in the future, your best bet is to get coverage or file for an exemption. If none of the previously mentioned exemptions apply to you but you still can’t get coverage, then you can file for an open-ended hardship exemption to avoid the penalty. In short, you may not face penalties and fines now, but you might later, so it’s best to keep yourself out of trouble by following the law and getting coverage if possible.