Tax penalties for lack of health insurance coverage being rolled out

The reality of the Patient Protection and Affordable Care Act is that the large number of Americans who, for one reason or another, go without health insurance will face a tax penalty for doing so. And now that the April 15 deadline is near and open enrollment for 2015 has closed, this is the area of the law that experts are beginning to focus on.

The enforcement of the health insurance coverage mandate for the 2014 tax year is simple: Adults who went without coverage for the year will face a penalty equal to the larger of $95 or 1 percent of their income, according to a report from the New York Times. However, the problem that many industry experts see behind this idea is that data shows many people the law is intended to help – that is, those with lower incomes – are not aware of these provisions.

The burden could add up quickly for those people who don't know they have to have health insurance coverage, and also don't know they'll be facing a potentially sizable penalty of as much as a few hundred dollars per household, the report said. Some people might have gone through the year without such policies because they feel healthy and would rather pay the penalty than potentially thousands of dollars' worth of insurance, but those who through their ignorance of requirements did not even get that opportunity might find the situation difficult.

What can be done?
As a result of these issues, some federal lawmakers have asked Pres. Barack Obama to consider extending the open enrollment period through the end of tax season, so that people can become more aware of the financial decisions they may have available to them at a time when these costs are already front of mind, the report said. These legislators further note that there's nothing in the language of the ACA that would prevent the White House from extending enrollment periods to just about any length they want, and that such a change could go a long way toward not only helping lower-income Americans avoid a potentially hefty cost, but also boost enrollment numbers.

Health insurance companies might want to be a little more proactive in educating consumers about what options might be available to them as well. This could help to increase the number of policyholders they have overall.