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What If I Don’t Have Health Insurance?

This article is from Jacob Sercopian, a Los Angeles personal injury attorney. It used to be an American’s God-given right to refuse to buy health insurance, and the only penalty paid were the sky-high medical bills when you accidentally drove over a pedestrian’s toes, contracted an especially virulent case of jaundice, or some other unplanned calamity. Those were the good, old days. With the advent of the Affordable Care Act (Obamacare), it’s not so easy to blithely live your life on a roll of the dice.

The SRP
The success of Obamacare rests on the premise that everyone needs to pay something for healthcare, even the healthy people. In order to prevent the mass dereliction of this “necessary” social duty, the Obamacare braintrust created the Shared Responsibility Payment (SRP). If you haven’t been introduced to the concept of the SRP yet, here’s the short version. Guess what happens if you don’t insure yourself during a calendar year? You get hit with a penalty from the government, and that’s the SRP. Is the SRP optional? Ha! You wish. Though there exemptions you might apply to get out of paying it. We’ll talk about that later.

Calculating the SRP
The SRP was an unpopular part of Obamacare that didn’t go live until 2014, and even then it was set at only a fraction of the amount it would become in 2015 and 2016. In that first year of existence, those without health care were required to pay the greater of $95 or 1 percent of their modified adjusted gross income (MAGI). Estimates from H&R Block pegged the average SRP payment in 2014 at $190. In 2015, the calculation became the greater of $325 or 2 percent of your MAGI. This year you will pay the greater of $695 or 2.5 percent of your MAGI. Depending upon your income, the SRP might be a thousand dollars or more. Maybe a lot more. Keep in mind that the penalty is capped at the cost of the least expensive bronze plan in your state.

Exemptions
No government program would be complete without a nice set of exemptions, and the SRP is no exception. In general, if you can prove some sort of economic hardship you might be able to get out of paying the penalty. There are more than one dozen reasons listed at Healthcare.gov. A few popular choices are homelessness, victim of a foreclosure or natural disaster, disability, bankruptcy, etc. Even the death of a member or domestic violence are considered mitigating factors when it comes to the SRP responsibility.

The Penalty for Not Paying the Penalty
As you might expect, not paying the SRP doesn’t mean the government will quietly go away and never mention it again. The good news is that collection efforts will not include wage garnishment, property seizure, or jail time. With around 80 percent of Americans due a refund on federal taxes each year, guess where Uncle Sam will turn first? That’s right. Expect any money you might have been expecting back to go towards your SRP payment first. Not enough of a refund? Don’t worry. IRS collectors are a patient bunch with long memories. They’ll intercept your refund each and every year for eternity if they must.

There you have it. The bottom line is that you still have your American right to choose not to carry health insurance. Just expect that exercising that right might come with a penalty. Keep in mind that you can’t just up and decide to buy insurance any old time you want. The enrollment period for 2016 is already gone but your opportunity to get covered for 2017 runs November 1, 2016, through January 31, 2017. Only you can decide what the right decision is, but may we suggest you make at least a rough calculation as to what your 2017 penalty will be?

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