Thursday, February 19, 2015

Why the Uninsured Prefer to Pay the ObamaCare Tax Penalty

Recently, three Democrats began lobbying to delay the ObamaCare tax penalty for not buying healthcare insurance because they are worried that millions of their constituents are going to be blind-sided by the cost.  Even though those same three Democrats voted for ObamaCare and should be well aware that there was an individual mandate in the law; and, that not buying insurance, carried a penalty.  A penalty that was designed to force the uninsured to buy insurance.  This was a law that the Democrats, alone, legislated and got signed.  Even so, the uninsured rate is still extremely high with 42 million Americans still without insurance; and, any dent in that number will be small because Health and Human Services only expects to enroll and re-enroll a total of 10 million this year. 

What those Democrats don't seem to understand is that people are electing to pay the penalty because they can't afford the insurance that they are being forced to buy under the Affordable Care Act (aka ObamaCare).   Also, many (if not most) know the penalty won't be applied to them if they file for a hardship exemption.

To understand this and why ObamaCare insurance is so unaffordable and a hardship for millions, you need to use the Tax Policy Center's ObamaCare penalty calculator. 

Using the median household income in the country of about $52,000 a year and assuming a typical family of two adults and one child, the 2014 tax penalty would be $419 for not buying insurance. More importantly, a family of that size and income would not be eligible for any subsidy to help pay for their insurance. But, here's the kicker and why the Democrats just don't understand why so many would prefer to pay the penalty.  The lowest cost to buy insurance in the ObamaCare exchange for that family size was $9,792 last year.  In tax year 2015, the penalty is upped to $975; and, so is the cost of insurance at $10,280.  Next year, the tax penalty will be yet higher at $2,080.  Even so, the cost of paying the penalty greatly outweighs the cost of buying the insurance. 

You don't have to be an MBA to understand that buying insurance at that income level is a big financial hit after paying federal income taxes.  In fact, a family making $52,000 a year will only have $39,000 left after paying their federal taxes. Much lower if state income taxes also need to be applied. So, having to spend nearly $10,000 to buy ObamaCare insurance will, at the very least, cut the average family's disposable income by more than one-quarter; leaving them with less than $29,000 to live on.  On top of that, that same family would still face a potential out-of-pocket expense per individual of $6,600 a year; or, $13,200 per family.  A fact that most Democrats don't seem to understand.  So, for a lot of people, the only choice is to pay the penalty and forgo the insurance. Most of them also probably know that they can go to any Medicare-accepting Hospital and they will be treated for free under a law called the "Emergency Medical Treatment and Active Labor Act".

Literally, those aforementioned Democrats don't seem to understand that it is the law that should be delayed and, not just the penalty.  If not, the number of uninsured in this country is not going to be eliminated; and, all too many hospitals will be left holding the bag for their care.


 APNewsbreak: Democrats seek relief from health law penalties:

Democrats Keep Running Away From ObamaCare:

Millions to owe Obamacare tax penalty:

US Census Data: Uninsured Rate…Increased in 2014?:

Median Family Income:

ObamaCare Penalty Calculator:

$ 52,000.00 Tax Calculation for 2015 Tax Year:

Bronze Plan Deductibles and Out-of-pocket Caps:

Emergency Medical Treatment and Active Labor Act:

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