Some may argue that the tax penalty for not being insured is too low to have any impact. The current penalty is $695.00 per adult and $347.50 for each child under eighteen. Maximum $2085 per family. While that is a hefty amount for most people, the amount is not the reason it is ineffective.
The real reason is that the penalty is meaningless for many people. First, there are a score of exceptions to the penalty. Then there is the way it must be collected. The taxpayer can voluntarily pay it or if the taxpayer is entitled to a tax refund, the IRS is allowed to deduct the penalty. That is the only way the penalty can be collected.
Believe it or not 75% of Americans receive a tax refund averaging about $2,700. Now you may conclude that most people (not qualifying for an exception) will therefore ultimately pay the penalty. Clearly that seems to be the case, but even if true it has little impact because the tax refund is "found money" and getting a bit less does not have the same impact as actually paying a penalty. Think of it this way. Which hurts more, having your premiums deducted from your pay so you never see it or being required to write a check each month to pay your premium. It's a perception thing.
I called the Obamacare hotline to try to enroll a few moment ago but I missed the deadline which is 60 days from the separation day, the day I was let go. There was nothing the Rep could do for me and as I will expect a refund for 2016, there goes the additional tax of $2,000. Thanks for nothing Mr. Obama!
Someone once gave me the advice to reduce my withholding so that it matches the expected tax payment. Save the difference. Keep or pitch.
My sister pays the penalty ever year, on her husband, because she makes too much to get a subsidy. Her husband is 60, unemployed, a smoker and his premium for insurance would be $8,400 per year. With a $6,000 deductible. So, it is $695 or $14,400 for health insurance. His health care cost for 2016 = zero.visits to the doctor.
She should make sure she doesn't get a tax refund.
She almost always has to pay something because of SS, she is 68. I told her she does not have to pay the penalty, because they have no way to get it. But she pays it, because she thinks once the government figures that there are billions of dollars that have not been collected, they will be going after the money plus interest. She will be retiring in Feb 2017 and does not want a big tax bill in retirement.