Are The Penalties Worth the Premium?

The penalty for mandated insurance is not having the predicted impact, but that doesn’t mean it won’t cost the uninsured a hefty chunk of their cash.

The government added a late healthcare enrollment period to follow 2015 tax season, at which point, for the first time, consumers noticed these penalties coming out of their income tax refunds without health coverage. Half a million people were predicted to join the healthcare marketplace, while only around 200,000 actually applied.

What has been a question for years is the real impact of this penalty. We are seeing for the first time that it is ineffective, as high earners would pay more in premiums than this penalty takes away, and do not receive the subsidies that lower earners would.

However, most studies, such as this one by Caroline Pearson, identify that both the gap between premium cost and penalty cost is slimming rapidly, and that the cost of out-of-pocket expenses for uninsured individuals is not accounted for in these predictions. Here are some realities brought up by Pearson:

  • The penalties for being uninsured could double or triple next year
  • This year a middle earner would only pay $391 more on insurance than the premium, not including out-of-pocket expenses
  • That number could shrink to $200 or less by next year
  • Costs of health insurance are already beginning to go down


It’s getting harder and harder to say no to health insurance, but the numbers for coming years make it nonsensical.