While rolling silverware at the City Diner in St. Louis, waitress Rachel Bingham recalled her attempt to buy health insurance for herself and her five-year-old daughter last year. She said when she signed on to Healthcare.gov, she realized she couldn't afford it.
"They were wanting $231 a month. That was not doable," Bingham said. She’s been paying out-of-pocket for doctor’s appointments ever since: $60 for primary care, $200 for the dentist. Luckily, her daughter’s a healthy kid, she said.
But come tax time, Bingham will have to find a way to fit another payment into her already tight budget: a penalty for not having health insurance.
“I’m kind of dreading it,” said Rachel Bingham, a single mother. She hasn’t calculated how much she’ll lose on her tax return, but it’ll likely be more than $100. That lump sum she gets back each year is a necessity, she says.
“If I do have to pay off a big bill, if I get behind on my bills throughout the year, if I need big car repairs, house repairs, whatever—I depend on that,” Bingham said.
St. Louisans who did not receive health coverage from their employerin 2014 and made too much to qualify for Medicaid were given a choice: Purchase insurance on the federal exchange, or pay a penalty.
The penalty would be garnished from income tax returns filed in 2015, more than a year away. But now that April 15 tax deadline is right around the corner.
Who’s Paying?
An IRS spokesman said it’s impossible to estimate how many people will actually pay the penalty this year, because hard numbers for how many people were uninsured are unavailable, and it's unclear how many people will qualify for the numerous exemptions to the penalty.
The penalty is a one-time payment of $95 per person in a household ($47.50 for children under 18) or 1 percent of a household's income, whichever is higher. There is a cap on how high the penalty can be using either payment method.
In general, the penalty applies to people who were uninsured for all or part of 2014, but there are a number of exceptions:
- You were uninsured for fewer than 3 months.
- The lowest-priced coverage available would have cost more than 8 percent of your income.
- You’re a member of a recognized religious sect that objects to insurance.
- You qualify for a ‘hardship exemption,’ such as bankruptcy, the death of a family member or falling into the Medicaid coverage gap.
For those who did buy insurance on the federal exchange, they'll file an additional form on their taxes called Form 1095-A, which computes the final premium tax credit for 2014. The Centers for Medicare and Medicaid Services published state-centric tip sheets to help consumers work through the process—you can find Missouri’s here.
If you’re still uninsured, penalties are set to increase next year.
A Look at the Numbers:
It’s difficult to say how many people will be required to pay the tax penalty. The latest census numbers for the number of people without health coverage are from 2013, before plans were available on Healthcare.gov.
Since Nov. 15, 2014 -- the start of the new enrollment period -- at least 209,336 Missourians have selected a plan on Healthcare.gov or have been re-enrolled in their old one, according to the latest numbers from the U.S. Department of Health and Human Services. The deadline to sign up for coverage is Feb. 15.
So far, about 52 percent of people using federal exchanges (including Missourians) signed up for the first time during the current enrollment period, according to the HHS numbers. Federal officials have been pressing people who bought insurance last year to revisit Healthcare.gov and re-enroll, because some plans and prices may have changed.
Hundreds of thousands of people likely remain uninsured in the state: in 2013, about 773,000 Missourians did not have insurance. According to federal data, 152,335 of them bought insurance on the federal exchange for 2014.
In Illinois, just under 217,500 people bought coverage on their state exchange—another 181,000 gained coverage through the state’s Medicaid expansion. About 1.6 million had been uninsured in 2013.
Of the new enrollees 87 percent received income-based financial assistance when they selected a plan on Healthcare.gov. Those subsides are being challenged in a case called King v. Burwell, which will be heard by the Supreme Court this spring.
