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2016 Comes With a Big Penalty for the Uninsured

The increased penalty may serve as an incentive for sign-ups

In 2015, the penalty for not having health insurance for a full 12 months was $325 or 2% of one’s income. This will change dramatically with the 2016 sign-up that starts November 1, when the penalty rises to $695 or 2.5% of taxable income.

The Associated Press notes that with subsidized customers now putting in an average of about $100 a month of their own money, a consumer would be able to get six months or more of coverage for $695 rather than owing that amount to the Internal Revenue Service (IRS) as a tax penalty. Backers of the law are urging the administration to hammer that home.

"Given that the penalty is larger, it does make sense to bring it up more frequently," said Ron Pollack, executive director of Families USA, a liberal advocacy group. "It's an increasing factor in people's decisions about whether or not to get enrolled."

"More and more, people are mentioning the sticks as well as the carrots," said Katherine Hempstead, director of health insurance coverage for the Robert Wood Johnson Foundation, a nonpartisan organization that has helped facilitate the insurance expansion under the Affordable Care Act. Hempstead says the message about penalties resonates with uninsured people, who are generally cash-strapped low- and middle-income workers. A lot of people cite it as the main reason for signing up, she said. "It's the law and they don't want to pay the penalty.”

The requirement that individuals get health insurance or face fines remains the most unpopular part of President Barack Obama's health care law, a prime target of Republican repeal efforts. It started at $95 or 1%% of income in 2014. The fact that it's up to $695 may take consumers by surprise.

Source: Associated Press, October 19, 2015.

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