The Costs of Remaining Uninsured: Navigating the Affordable Care Act

CFP Board Consumer Advocate Encourages Uninsured Americans to Consider Long-Term Benefits of Health Insurance

Come October 1, the much debated Affordable Care Act will become a reality as state health care exchanges open to provide standardized levels of coverage. During the open enrollment period, approximately 12 million Americans currently without insurance will have three months to make the decision as to whether to purchase health care coverage or pay a penalty for non-compliance.

In the latest installment of CFP Board’s “Let’s Talk Planning” blog and the third feature in its “Let’s Talk Obamacare” series, Certified Financial Planner Board of Standards (“CFP Board”) Consumer Advocate Eleanor Blayney, CFP® advises those thinking about paying the penalty instead of buying insurance to consider the long-term financial benefits of having health insurance. Previous installments in the series included posts on the impact of the Affordable Care Act on individuals working for large employers, and small business employees and the self-employed.

“Many, but by no means all, uninsured individuals are American adults under the age of 30, who mostly enjoy the robust good health that comes with youth.  Medical costs, let alone health insurance, are often pretty low on their list of financial concerns,” says Blayney. “Facing the choice to get insurance or pay a penalty, they may resort to simple math and conclude that $95 is a lot more affordable than the $3,000 or $4,000 that is currently being estimated as the cost of the lowest level of insurance coverage available on the state exchanges.”

However, Blayney advises Americans to consider several factors before deciding to pay the federal penalty and forego health insurance:

• Rising penalties for having no insurance – In 2014, uninsured Americans will be required to obtain health insurance or pay a penalty equal to the greater of $95 per adult and $47.50 per child, or one percent of family income.  In 2015, the penalty rises to the greater of $325 per adult (half as much for each child) or two percent of income.  In 2016 and beyond, the penalties rise even further.
• The risk of incurring huge medical costs due to an accident – Being young and healthy does not vaccinate you from the kind of risk that can leave you and your family destitute.
• Limited access to quality medical care when you do need it – While the Affordable Care Act will not close down access to emergency rooms when an uninsured individual needs immediate care, getting treatment from other physicians for chronic conditions is going to be a lot more difficult.  Some providers, upon learning you are uninsured, may simply decline you as a patient.
• The increased likelihood that you will neglect the routine, preventative procedures that can keep you healthy – It stands to reason that if you are unwilling to pay for insurance, you’ll probably be averse to the high cost of an annual check-up or routine procedures. 

“The likely reality is that it’s going to cost more for the uninsured to get health care coverage under the Affordable Care Act, relative to what it costs now,” says Blayney.  “But the financial math needs to factor in not just the hard, out-of-pocket costs today, but the potential costs of being without insurance. Visit HealthCare.gov to be directed to your state’s health care exchange website – or the federal exchange if your state has not yet adopted its own – and begin to comparison shop. And talk to a CERTIFED FINANCIAL PLANNER™ professional, who can help you evaluate the costs of coverage options and plan for comprehensive health care under the Affordable Care Act.”

ABOUT LET’S TALK PLANNING

“Let’s Talk Planning” is a blog by CFP Board Consumer Advocate Eleanor Blayney, CFP®, with posts each week with practical financial planning tips for consumers, as well as insights into the latest developments at CFP Board.  In addition to offering counsel on timely and evergreen financial planning topics, once a month Blayney will remind readers that “financial planning is for everyone,” with tips for consumers of all ages and life stages.