Millennials aren’t buying health insurance with Obamacare. Miss the March 31 deadline or not, it may cost you.
The largest group of Americans not signing up for Obamacare are also the youngest and healthiest. And according to a new study, they may also be the dumbest.
A national survey of 4,067 Americans by career network Beyond.com shows that over half of millennials — those ages 18-31 — don’t understand Obamacare. The survey showed that 52 percent said “they were still confused about the legislation, and in some cases didn’t even know what it was.”
On top of that, 23 percent thought that the Affordable Care Act and Obamacare were two different things. (They aren’t.)
It’s a safe bet that if these young people don’t know what the ACA is, they probably don’t know what Monday is — the deadline to apply for Obamacare or pay a penalty. That’ll cost millennials (and everyone else who forgets) at least $95 for the year and up to 1 percent of their income, depending on a myriad of factors we outline below.
March 31 is the drop-dead date to get signed up for health insurance. “Most people must have health coverage in 2014 or pay a penalty,” says Healthcare.gov, the official Obamacare website. “If someone doesn’t have health coverage in 2014, they may have to pay a fee. They also have to pay for all of their health care.”
Of course, this being the government, it’s not quite that simple. Here’s Obamacare explained in simple words even a millennial can understand…
Do I really have to pay a penalty?
No. Not if you’re homeless. Or ” a member of a recognized religious sect with religious objections to insurance.” Or if you “recently experienced domestic violence.”
There are 22 exemptions listed on Healthcare.gov exemption page. So if you “received a shut-off notice from a utility company,” you can fill out a bunch of forms and have the penalty waived.
(And no, the website doesn’t explain how “recently” your domestic violence must be, or which religious sects are recognized.)
So I’m not exempt, and I don’t have health insurance. Now what?
Obamacare’s goal is to offer all Americans affordable health insurance. But to do that, it mandates that everyone have health insurance. That lowers the cost by spreading out the risk.
To encourage/force you to sign up for health insurance, the federal government will now charge you for not having it.
But like we said, this is the government. So the rules aren’t easily explained.
For starters, you don’t pay now. You pay next tax season. So when you file your taxes, you’ll either pay more or have it deducted from your tax refund. How much will you pay? It’ll go up every year. Here’s the breakdown of the fee off Healthcare.gov…
- 2014: $95 or 1 percent of your income; $530 if you make the median household income, according to the Census Bureau
- 2015: $325 or 2 percent of your income
- 2016: $695 or 2.5 percent of your income
- 2017: Tax penalty will increase by the rate of inflation now and going forward, or 2.5 percent of your income, whichever’s higher
If you miss the deadline, you can still get insured somewhere else besides the Obamacare insurance marketplace (more on that below), but you’ll pay 1/12 of the penalty for every month you’re uninsured.
The next sign-up period for Obamacare is Nov. 15. So if you miss Monday’s deadline and sign up then, you’ll owe a minimum of $71.25.
How can I get insured and get rid of the penalty?
You have options:
- Stay on your parents’ insurance until you’re 26 years old. The way Obamacare sees it, you’re still covered.
- Buy insurance outside of Obamacare. The federal government isn’t offering you health insurance. Obamacare is really just a “marketplace” of private companies. But you can go to those companies yourself and compare prices.
- Get insured through your employer. Compare costs, and you might find plans through work are cheaper.
- Buy health insurance through the government. If you get off your butt by Monday at 11:59 p.m., you can choose from plans in four tiers. The government calls them Bronze, Silver, Gold, and Platinum. The more expensive the tier, the more your plan covers, but the more it costs. Go to Healthcare.gov and click the orange “Apply Now” icon to find out how much.
For millennials, the prices are rising regardless. Forbes says health insurance costs will rise more for millennials than any other age group. By way of example, the magazine showed a 21-year-old man’s health insurance premium was $3,649 in 2013. This year, the same 21-year-old will face premiums of $6,605 — an 81 percent increase.
Can anyone help me out here?
Certain people qualify for discounted insurance by using a premium tax credit at the end of the year. Basically, if your income is within one to four times the poverty level, you may be eligible.
“The lower your income is within these ranges, the bigger your credit,” Healthcare.gov says. But just like the exemptions, this gets complicated. To qualify, here are the income ranges:
- $11,490 to $45,960 for individuals
- $15,510 to $62,040 for a family of 2
- $19,530 to $78,120 for a family of 3
- $23,550 to $94,200 for a family of 4
- $27,570 to $110,280 for a family of 5
- $31,590 to $126,360 for a family of 6
- $35,610 to $142,440 for a family of 7
- $39,630 to $158,520 for a family of 8
If you fall into one of the categories above, you aren’t done yet. Forbes breaks down the other requirements for tax credit eligibility:
- You must buy insurance through Obamacare.
- You can’t be eligible for coverage through an eligible employer or government plan. In other words, if the government says your boss offers solid insurance, you get nothing — even if you don’t sign up for it.
- If you’re married, you must file a joint tax return.
- You can’t be claimed as a dependent.
A site called GetInsured.com offers a free calculator to determine if you qualify for these credits. If you do, you can lower your monthly premiums by that amount or wait till the end of the year, declare them on your tax return, and take the money then.