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What Happens to Those Uninsured by Obamacare Deadline?

A breakdown of penalties for not signing up for health insurance by the March cutoff date.

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Getty Images
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The confusion over Obamacare is not confined to its glitched-up website. As the deadline to enroll for health care nears, many Americans have been wondering what happens if they simply do not sign up.

There has always been mention of a penalty for those who fail to obtain health insurance by the March 31 cutoff date, but as a The New York Times points out, state health insurance exchange websites do not broadcast the penalties. The federal website refers to the penalties as “Individual Shared Responsibility Payment,” which is so vague it could be a charge on your cell phone bill.

As the deadline approaches, state and federal exchanges may put more emphasis on penalties: That’s what Massachusetts did when it rolled out Romneycare. But for now, “We feel that the carrot is better than the stick,” Larry Hicks, a spokesman for Covered California, told the Times.

Here’s a breakdown of the punitive prices for anyone considering noncompliance:

Basic penalty: For 2014, the penalty will be $95 for anyone who makes less than $19,500, is unmarried and has no dependents.

Make over $20,000? If you make more than $19,500, there’s a very complex calculation for your penalty, which Forbes’ Roberton Williams does an excellent job of breaking down. But if you want a shortcut estimate, follow this process: subtract $10,000 from your income, and then take 1 percent of that. That’s your approximate penalty. (The finer points of your tax return could shift the number up or down.)

Got kids? For anyone married or with kids, there’s a minimum of $95 per person, including all dependents over 17-years old, and $47.50 for kids under the age of 18. The penalty is not supposed to exceed $285, unless you’re income is in the mid-six figures or above. Again, here’s a simple way to compute your penalty: Most abstainers with families will need to subtract $20,000 from their household income and take 1 percent of that.

Reprieve: If you do have insurance for part of the year, your penalty will be prorated.

It gets worse every year: If these penalties don’t sound so bad, keep in mind that they will increase annually. Today the income penalty is 1%, but by 2015 it’s 2%. The minimum that’s $95 today will be $695 by 2016. Again, if you want to dive in deeper, check out Williams’ breakdown.

Are you or anyone you know planning to take the fines rather than sign up for health insurance? Tell us why the comments or in a blog post.


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