To buy insurance or pay the tax? That is the question.

The blog Political Calculations has a great tool for determining whether it makes sense for you to keep your health insurance in the Obamacare era.

The Affordable Care Act was sold on the promise that anyone who likes his or her insurance will be able to keep it. But since premium costs have already risen sharply since the Affordable Care Act became law (and may well continue to rise for years to come), many people will soon have to ask themselves whether they can afford to keep their insurance - especially if they know that they can buy it again when they become sick, at the same price.

As we all know, the Affordable Care Act encourages the purchase of insurance through new federal subsidies (for those who earn up to 400% of the Federal Poverty Level or about $90,000 for a family of four) and the imposition of a tax on individuals and households that choose to go without coverage. The problem, however, is that the tax levied on forgoing health insurance will turn out to be substantially lower than the annual cost of purchasing insurance for many of the individuals and families subject to it.

The Political Calculations tool allows you to input your annual income, the cost of your health insurance policy, the kind of policy you carry (individual/household), and the odds that you will actually need health insurance this year (based on statistical data). Using these figures, it compares the cost of your insurance to the tax you will have to pay if you choose to go without insurance, while figuring in the odds that you will need health insurance to determine whether going without insurance is worth the risk.

By comparing costs and assessing your (hypothetical) individual risks, Political Calculations can give you some sense of whether or not you should drop your health insurance. The calculator doesn't include the subsidies in its calculation, but you can find those included at the Kaiser Family Foundation subsidy calculator here. Using these tools together will offer you a full picture of the impact that carrying insurance - or paying the ACA's penalty - will have on your and your family's budget.

The results are likely to be surprising - and uncomfortable for supporters of the law.


Question I haven't seen answered in any articles -- is the tax proportional to the number of years a year you spend uninsured?

I.e., if I choose not to buy health insurance for 5 1/2 months out of the year, do I pay the full tax, a partial tax, or no tax?

Thanks. Assuming buying health insurance isn't front loaded, we may see people buying insurance for brief periods of time every 3 months.

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