It’s more than the cost; it’s long-term peace of mind.
That’s the message from Eleanor Blayney, the CFP Board’s consumer advocate, who advises Americans to consider several factors before deciding to pay the federal penalty and forego health insurance.
In the latest installment of CFP Board’s Let’s Talk Planning blog and the third feature in its “Let’s Talk Obamacare” series, Blayney acknowledges the “highly controversial nature” of the Affordable Care Act, enrollment provisions of which are set to begin in October. During the open enrollment period, approximately 12 million Americans currently without insurance will have three months to make the decision as to whether to purchase health care coverage or pay a penalty for noncompliance.
“Many, but by no means all, uninsured individuals are American adults under the age of 30, who mostly enjoy the robust good health that comes with youth,” Blayney (right) says. “Medical costs, let alone health insurance, are often pretty low on their list of financial concerns.
She adds that facing the choice to buy insurance or pay a penalty, they may resort to “simple math” and conclude that $95 is a lot more affordable than the $3,000 or $4,000 that is currently being estimated as the cost.
Before opting to pay the penalty, the following factors should be considered:
- Rising penalties for having no insurance – In 2014, uninsured Americans will be required to obtain health insurance or pay a penalty equal to the greater of $95 per adult and $47.50 per child, or one percent of family income. In 2015, the penalty rises to the greater of $325 per adult (half as much for each child) or two percent of income. In 2016 and beyond, the penalties rise even further.
- The risk of incurring huge medical costs due to an accident – Being young and healthy does not vaccinate you from the kind of risk that can leave you and your family destitute.
- Limited access to quality medical care when you do need it – While the Affordable Care Act will not close down access to emergency rooms when an uninsured individual needs immediate care, getting treatment from other physicians for chronic conditions is going to be a lot more difficult. Some providers, upon learning you are uninsured, may simply decline you as a patient.
- The increased likelihood that you will neglect the routine, preventative procedures that can keep you healthy – It stands to reason that if you are unwilling to pay for insurance, you’ll probably be averse to the high cost of an annual checkup or routine procedures.
“The likely reality is that it’s going to cost more for the uninsured to get health care coverage under the Affordable Care Act, relative to what it costs now,” Blayney concludes. “But the financial math needs to factor in not just the hard, out-of-pocket costs today, but the potential costs of being without insurance.”
Read more on Eleanor Blayney: 4 Financial Planning Steps for New American Citizens on ThinkAdvisor.