As many already know, the penalties for not having health insurance is increasing annually. The penalty for an individual in 2016 is a minimum of $695 or 2/5% of your income up to $2484, whichever is greater. The penalty for an individual with spouse and/or dependents is $695 per adult and $347.50 per child (up to $2,085) or 2.5% of your income to $12,240 whichever is greater.
That’s a lot of money in fines which is meant to force you into buying insurance coverage.
Let’s look at the facts.
If your income is $50,000, you subtract the tax filing threshold of $10,300 leaving a net income of $39,700. Then multiply the $39,700 times .025%. The penalty is $992.50. You cannot get coverage for $82.71 per month. (The penalty divided by 12)
Individual with spouse and/or dependents
If your income is $75,000, and you have a spouse and 2 children, you subtract the tax filing threshold of $20,660 leaving a net income of $54,340. Then multiply the $54,340 times 2.5%. The penalty is $1,358.50. The penalty is stiff but not enough to warrant you spend money on health insurance because when you divide the penalty by 12 it ends up costing about $113.21 monthly. A family of 4 cannot get coverage for $113.21 per month. (The penalty divided by 12)
When you analyze the penalty in relation to the cost of health insurance you can begin to understand that the penalty is not enough to make you buy health insurance. That is why we still have millions of uninsured in the US.
This blog was intended to point out the penalties for not having health insurance and to get everyone thinking. Stay tuned, more to come.
Len Barend The Barend Agency Inc.