Insurance penalty more than many expect

If you think not having health insurance will mean paying a simple $95 fine, you might be wrong. Because for most people, it's more complicated than that — and potentially more expensive.

"People say, 'It's just a Ben Franklin,' " said Brian Haile, senior vice president for health care policy at Jackson Hewitt Tax Service. "I say it's probably more than one."

Under the Affordable Care Act, most Americans are required by law to have health insurance. You can purchase a plan either on the new federal health insurance marketplace or off the marketplace but without financial aid. Those who have not enrolled in a policy by March 31 could face a penalty.

In 2014, the penalty is $95 per adult and $47.50 per child or 1 percent of adjusted household income, whichever is greater.

Whether you pay the flat penalty or 1 percent of income depends, in part, on how much you earn and your filing status.

For example, if you and your spouse have two children, your family's uninsured, and you file taxes jointly, you face a tax penalty of at least $285.

If your household income before deductions exceeds $50,000, you'd pay more. A household income of $75,000, for example, would mean a penalty of $547.

You won't feel the effects of the penalty for a while because it gets applied to your 2014 federal tax obligation, due in April 2015.

Because of that delay, "in some ways, it doesn't feel real to a lot of people," said Nancy Kelley, a certified application counselor at the St. Louis Effort for AIDS. Still, the penalty could catch taxpayers by surprise next year.

And if you choose to stay uninsured in 2015, expect a much-bigger penalty. Next year it will amount to $325 per adult or 2 percent of household income.

But like the law that created the penalties, there are complications.

First, if you earn up to 138 percent of the federal poverty level and you live in Missouri, you are exempt from the penalty. This is because the state chose not to expand Medicaid, so the federal government extended this pardon to those who would have been eligible under the expansion.

Second, if your previous policy was canceled because of Affordable Care Act requirements, you are exempt for one year.

You're also exempt from having to get insurance coverage if you're in prison, you're not legally in the U.S., you're in a health care sharing ministry or recognized religious sect that objects to health insurance, you're a member of a federally recognized Indian tribe, or if the cost of coverage would exceed 8 percent of your household income.

If you don't see your situation listed but believe you should be exempted, there is an appeals process available on the marketplace application. There's also a long list of hardship exemptions with several applications, depending on your situation.

This might be encouraging, too: You will not be penalized if you have a coverage gap of less than three consecutive months.

How much is my tax penalty?

Starting in 2014, having just one uninsured member of your tax household can cost you. All nonexempt members must have health insurance to prevent a penalty. If the penalty applies to you, your tax liability could increase, or the IRS could take money out of your refund.

This tool is for illustrative purposes only, and users should discuss results with a trained tax preparer before drawing conclusions.

Kelley believes most people are motivated more by the opportunity to have coverage than by the penalty.

"Starting with the penalty is kind of the negative side of it," she said. "But truthfully, you can get enrolled now and you will still have nine months out of the year that you will be covered with health insurance."

If you do decide to purchase a plan on the marketplace, there are only eight days left, so Julie Brookhart, spokesperson for Centers for Medicare and Medicaid Services, offered some tips.

She said to allot a sufficient amount of time to fill out the online application, shop for plans and make a selection. She said to visit localhelp.healthcare.gov if you want to find in-person assistance nearby.

You can also visit CoverMissouri.org or GetCoveredIllinois.gov to find help in your state.

If filling out an online application, try for off-peak hours, such as late evening or early morning when the site is less likely to be backed up.

Brookhart does not recommend filling out a paper application because the deadline is so close. If you choose to go with paper, she said to call the marketplace hotline (1-800-318-2596) five days after submitting your application to complete your enrollment.

Here are some documents she listed to have on hand while completing your application:

• Social Security Numbers (or document numbers for legal immigrants)

• Pay stubs or W-2 forms for everyone who needs coverage

• Policy numbers for any current insurance plans

• A completed Employer Coverage Tool. This is an application on HealthCare.gov that requires information of all employer-based coverage available to anyone in the household, even if you're not enrolled.

Many people who make up to 300 percent of the federal poverty level will be eligible for tax credits, called subsidies, which will make their coverage cheaper.

Finally, Brookhart noted that unless you have a major life change after March, you will not be able to enroll again until November.

Such "life events" include marriage, birth and loss of previous coverage.

Kelley added to the urgency.

"People are really waking up and going 'Oh my gosh, this is real. I now really have to act.' "