With some exceptions, the open enrollment period for most Ohioans to obtain health coverage under the Affordable Care Act will end at midnight today. But like millions of Americans, some local residents will simply ignore the deadline and pay the tax penalty for not abiding by the health law’s individual mandate to enroll.
After weighing the costs, 37-year-old Amy Peck of Middletown said she will pay the penalty rather than fork out $260 a month — the lowest premium she could find for a private health plan in Ohio’s health care marketplace, the online insurance exchange created by the ACA.
“I get sick maybe once or twice a year, and I’d still have to pay an office visit, plus the premium,” Peck said. “For my situation, it will cost less (to pay the fine) than the premiums for crappy coverage.”
Pete Schmidt of Kettering found it hard to palate rising health insurance premiums even before Congress passed the health law in 2010, and the tax penalty has given him little incentive to buy health coverage now.
“I am planning on dropping out of the system,” Schmidt said. “I will put the money I save into a bank account and pay for medical costs in cash. For a $95-a-year penalty, it is a no-brainer.”
Schmidt was referring to the first-year penalty of $95 per adult, and $47.50 per child under age 18 — money that will be held back from tax refunds beginning next year.
The penalty will be capped at a maximum of $285 per family, or 1 percent of modified adjusted gross income, and does not apply to people who are exempt from the health law.
That includes people whose income is below the tax-filing threshold, those for whom the lowest-priced coverage available to them would cost more than 8 percent of their household income and members of most American Indian tribes.
While ignoring the law may seem like a frugal alternative for some people who are not exempt, over the long-term, they could end up paying tens, or even hundreds, of thousands of dollars in tax penalties, according to a new study from NerdWallet.com, a financial-services information website.
Under the health law, minimum penalties will increase to $325 in 2015 and $695 in 2016. After 2016, the penalty will be adjusted based on annual Social Security cost of living adjustments.
From age 27 to 64 — the period when most adults are no longer eligible for dependent coverage from their parents or Medicare coverage for the elderly — an individual who never purchased health insurance would pay $42,077 in tax penalties, on average, while a family of four would pay $126,231, based on NerdWallet’s calculations, which assume a 2.78 percent annual increase in the cost of living.
Still, the Congressional Budget Office estimates that about 6 million people will opt to pay the fine instead of purchasing health coverage this year.
That’s same number of Americans who had signed up for coverage through the middle of last week, including nearly 80,000 Ohioans who had signed up through the end of last month, according to the latest updates from the U.S. Department of Health and Human Services (HHS).
Those figures are expected to continue to grow even after today’s deadline because of the Obama administration’s decision to extend the sign-up period for consumers with special circumstances, including trouble accessing HealthCare.gov — the federal website for enrollment in health care marketplaces in 36 states, including Ohio.
The website has been plagued by computer problems, and health officials have expressed concerned that the anticipated surge in demand for new policies as the open-enrollment period draws to a close may block people from signing up.
That happened last year when traffic swamped HealthCare.gov just before the deadline for signing up for coverage beginning Jan. 1. A surge of more than 1 million applicants forced the feds to shutdown the website for retooling and extend the deadline for coverage from Dec. 15 to Dec. 23 and then Christmas Eve.
To qualify for the latest two-week extension, applicants ostensibly must have at least attempted to log on to the website before the enrollment deadline. But HHS said it will not attempt to verify the status of those seeking coverage even after the deadline has past, potentially opening the doors to throngs of new applicants.
“We have no idea what kind of demand there is going to be, but we’ve been busy these last three weeks or so, and people still have a lot of questions,” said Deborah Ferguson, director of outreach and social services at Community Action Partnership of Dayton.
Ferguson said her organization has asked volunteers assisting with sign-ups to stay on until April 15 in anticipation of continued demand.
Greg Lawson of the Buckeye Institute for Public Policy solutions, which advocates repealing and replacing the health law, described the latest delay as a “legislative fiat.”
“It’s not even clear that they (Obama administration) really have the legal standing to make some of these extensions in the first place,” Lawson said. “If you have to do all of these things to get the law to work, you out to be considering modifying the underlying legislation instead of trying to whistle past the graveyard. That’s why you have laws. That’s why you have Congress.”
Monday is the deadline to sign up for health coverage or pay a fine under the Affordable Care Act. But you may qualify for an exemption if:
• You’re uninsured for less than three months of the year.
• The lowest-priced coverage available to you would cost more than 8 percent of your household income.
• You don’t have to file a tax return because your income is too low.
• You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider.
• You’re a member of a recognized health care sharing ministry.
• You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare.
• You’re incarcerated, and not awaiting the disposition of charges against you.
• You filed for bankruptcy in the last six months.
• You had medical expenses you couldn’t pay in the last 24 months.