Tax or not, here’s what it will cost you to skip out on health insurance mandate

Updated
By The Cycle Staff
Tax or not, here's what it will cost you to skip out on health insurance mandate
Tax or not, here's what it will cost you to skip out on health insurance mandate

The Supreme Court called it a tax. Mitt Romney’s calling it a penalty. Chris Christie’s calling it both.

Call the Affordable Care Act’s mandate whatever you like—but what will it actually cost the uninsured? Jansing & Co.’s Richard Lui broke down the numbers (video after the jump).

The Congressional Budget Office estimates that approximately 4 million Americans—1.3% of the population—will not buy health insurance. How much the health care law will cost them depends on their income:

There’s no penalty for those making less than $9,500 a year. 

“Above that,” Lui reports, “Those penalties will go up, but they will never go greater than 2½% percent of income.”

 

In fact, that maximum penalty will be phased in. In 2014, the most you’d pay for not having health insurance is 1% of your taxable income; 2% in 2015; and after 2016, the maximum penalty will be “increased annually by the cost-of-living adjustment,” according to the Kaiser Family Foundation.

So which is makes less of a dent in your wallet—the penalty or the plan?

The average employer-funded plan costs about $2,200 a year. So for those making $100,000 or less, it’s technically cheaper to go with the penalty.  As for plans not funded by an employer, those average about $4,300 a year.   

But as Lui pointed out, choosing not to buy health insurance could cost you more in the end: “A broken leg—those medical costs can be from thousands to tens of thousands of dollars.”

Not everyone will be penalized for opting out of health insurance.  Exemptions will be granted for religion reasons, financial hardship, American Indians, those without coverage for less than three months, undocumented immigrants, and incarcerated individuals. 

Tax or not, here's what it will cost you to skip out on health insurance mandate

Updated