Experts urge Obama administration to warn on increased ACA fine

Over the past few years, many Americans have become aware that the Patient Protection and Affordable Care Act mandates a fine for those who go without health insurance coverage, to be applied to their year-end taxes. However, what many may not know is that those fines are set to increase quite sharply for 2016, meaning that the perceived value of going without coverage as a means of saving money (particularly among the young and healthy) should drop substantially.

The federal fine for not having health insurance in 2016 will be the greater of $695 or 2.5 percent of annual income above and beyond the tax filing threshold, according to a report from the Insurance Journal. That constitutes a significant increase of the fee equaling the greater of $325 or 2 percent of income above the filing threshold seen for the 2015 tax year. However, those fines can be prorated for people who go without coverage for just part of the year.

What's the problem?
However, some experts have criticized the Obama administration, saying that it has not done enough to educate consumers about the increase in fines that could potentially prove quite costly for those who go without coverage, especially if they're doing so because they carry low incomes and find the plans available to them difficult to afford in the first place, the report said. But there's some concern that the reason these changing realities of the cost of going without coverage are simply not being highlighted to consumers because it's politically inconvenient; that is to say, while the White House gets an obvious benefit from helping people to find the positives in the coverage mandate, it might see some backlash if it starts promoting potentially massive penalties for millions of Americans.

Millions may be unprepared for a massive increase in penalties.

How does it work out?
The average consumer being hit with such a fine would likely be able to buy about six months' worth of health insurance for the $695 fine, and experts believe that this reality may be the best way forward when it comes to letting people know about the massive increase in fines (of about 114 percent), the report said. Ron Pollack, executive director of the advocacy group Families USA, told the site that this kind of information would likely lead to smarter decisions being made by consumers who, in the past, have considered not buying health insurance once again this year, even if they have access to federally subsidized coverage.

For its part, the Obama administration says that it is aware of these concerns and will do all it can to highlight the increased fines people will face, the report said. However, it will still continue mentioning the benefits more often, and with greater stress, despite the potential risk to the finances of millions of low-income consumers.

This is certainly something that health insurers may also want to monitor closely in the near future, as it could help them to aid many people in finding coverage that works for their budgets and helps them avoid major fines from the federal government.