On March 31 comes a big Obamacare deadline: have health insurance or brace for a fine.
The fine, it turns out, could be more painful than many people realize. In the months leading up to the deadline for complying with the individual mandate, the focus has been on fines of $95 per uninsured adult and $47.50 per child, with a maximum fine of $285 per family.
But theres another provision that didnt receive much fanfare: the government can impose a fine of one percent of income, if its more than the flat fine.
Thats the thing that could be more painful than many people understand, said Rob Glus of Conrad Siegel Actuaries, who advises businesses regarding the Affordable Care Act.
Put another way, the fine is $95 per adult, or one percent of income, whichever is greater.
And for people whose fine is based on their income rather than a flat fine, the maximum fine is much higher than $285.
The cap for the one percent fine is tied to the average cost of the bronze level health insurance plans sold on the federally-run health insurance exchange. That means an individual could be fined up to about $3,600, and a family could be fined up to about $11,000, according to Kaiser Health News, a leading source of information about the ACA.
Figuring out which type of fine would apply to you, and the amount, requires a little math.
Jackson Hewitt Tax Service has published a worksheet to help. A Jackson Hewitt Tax Service is located inside the Dawsonville Walmart.
"People are welcome to come in, and we will help them figure out what their penalty will be," April Chapman, office manager with the Dawsonville location said. The group's office hours inside the store are: Monday - Friday, 9 a.m. - 7 p.m., Saturday, 9 a.m. - 5 p.m. and Sunday noon 5 p.m.
Here are the basics: The one percent fine is based on an individuals or familys modified adjusted gross income, minus their filing threshold. Modified adjusted gross income includes all taxable income, minus deductions such as student loan interest, self-employed business expenses or alimony.
The filing threshold varies: $10,150 for a single or married person filing separately; $13,050 for a head of household; $20,300 for a married couple filing jointly; $16,350 for a qualifying widow.
Obviously, there are assorted moving parts that will dictate the amount of an uninsured persons fine.
Here are some examples, calculated using the Jackson Hewitt Tax Service calculator:
Single person with a modified adjusted gross income of $22,000: Their fine would be $118.50.
Single person with a modified adjusted gross income of $30,000: Their fine would be $198.50.
Married couple with a modified adjusted gross income of $50,000 filing jointly: Their fine would be $297.
Single person with a modified adjusted gross income of $80,000: $698.50.
Married couple with a modified gross income of $80,000 filing jointly: Their fine would be $597.
Single person with a modified gross income of $130,000: Their fine would be $1,198.50.
Married couple with a modified gross income of $130,000 filing jointly: Their fine would be $1,097.
Still, much of the criticism of the Obamacare fines, even from opponents, has centered not on how large the fines are, but rather how small.
That leads to whole other kind of Obamacare calculus. The success of Obamacare depends on enticing as many people as possible into buying health insurance. Its especially important to attract younger, healthier people. They are needed to offset the costs of sicker people, and drive premiums down rather than up.
So the concern has been whether the young and healthy will see a $95 fine (the fines for 2015 and 2016 are higher) as more appealing than buying health insurance, and remain uninsured. They are the one category of people whose premiums were expected to rise as the result of the Affordable Care Act.
Still, they also tend to have lower incomes. Obamacare has subsidies and tax credits to reduce the premiums of people with low and even moderate incomes. For example, financial help is available to single people earning up to $45,960 and families of four earning up to $94,200. So, as Glus of Conrad Siegel points out, someone deciding whether to accept the fine should find out the actual cost of coverage, and weigh that against the cost of the fine.
While the cost of coverage will likely be larger for the youngest and most healthy, at least they will be getting something of value for their money. For anyone to really understand what their true exposure it is going to take some education, understanding what their options are, and weighing that against the potential the potential penalties, Glus said.
Likewise, its hard to guess whether, in reality, many people will end up paying big fines. Only someone with an extremely high income would have to pay the maximum income-based fine.
That makes it a question of: How many people with high incomes, and presumably good jobs, lack health insurance, and would prefer to pay a fine rather than be insured? Sometime after March 31, the answer to that politically-charged question will become known.
Here are some other facts related to the March 31 deadline:
Some people are exempt from having to have health insurance in 2014, and having to pay a fine. They include:
People who were uninsured for less than three months of the year.
People who would have to spend more than eight percent of their family income to obtain the lowest-priced coverage.
People who dont have to file a tax return because their income is too low.
Members of Indian tribes.
People who are in jail.
Some people might quality for a hardship exception, including:
People who were evicted in the past six months or faced eviction or foreclosure.
People who had medical expenses they couldnt pay in the last 24 months.
People who received a shut-off notice from a utility company, or recently experienced domestic violence or recently experienced the death of a close relative.
People whose individual insurance plan was canceled and who believe other plans are unaffordable.
For people who are required to buy health insurance and fail to do so, their fine will be exacted when they file their 2014 tax returns, due in April, 2015. The fine amount will either will added to the taxes they owe, or be subtracted from their tax refund.
The fine rises in 2015 and again in 2016, when it will be 695 per adult or 2.5 percent of income, whichever is higher.
Reprinted with permission from PennLive.com and Dave Wenner. Editor/Publisher Kimberly Boim contributed to this report.