With the Obama administration pushing for young people to “get covered” and the high cost of medical care otherwise, getting health insurance may seem like a no-brainer. However, if you’re young and healthy, getting insured might not pay off. Here’s why:
1. You may not be legally required to obtain insurance
The Affordable Care Act, better known as Obamacare, includes a requirement to have health insurance by March 31 or else face a penalty of several hundred dollars or more, depending on your income. But if at least one of the following applies, you’re not legally required to purchase health insurance:
- Your religion opposes health insurance
- You’re an undocumented immigrant
- You’re in prison (don’t do this one on purpose!)
- You belong to an Indian tribe
- Your family income is below the federal filing threshold
- Health insurance would cost more than 8% of your income
2. You may be able to avoid a penalty
Even if you’re required to obtain health insurance, the IRS has limited capabilities to enforce the penalty. The IRS’s options include:
- Taking it from your tax refund
- Sending reminder letters
- Suing you
The only significant threat is the first option, as three in four Americans received a refund check last year. Reminder letters may be a nuisance, but that’s about it. As for suing you, the IRS would have to ask the Department of Justice to do so, which, as Texas Tech law professor Bryan Camp told Yahoo! Finance, “if it’s such a small amount, it’s unlikely the government would sue for the same very practical reasons you wouldn’t sue someone for $25.”
3. You’ll be subsidizing Grandpa
If you buy health insurance, you’ll really being paying for older people’s health care. That’s because as we age we tend to require more health care services, and you—being young and healthy—will likely pay more than your fair share. That’s a double-whammy since the median net worth of senior citizens is more than 13 times that of young adults, so you’ll effectively widen that gap!
To illustrate, the Wall Street Journal pointed out that Supreme Court Justice Samuel Alito made a similar argument about the young subsidizing the elderly under Obamacare. He stated that young adults now spend an average of $854 per year on health care, but under Obamacare they’ll have to pay roughly $5,800 for insurance. “The mandate is forcing these people to provide a huge subsidy to the insurance companies … to subsidize services that will be received by somebody else,” Alito argued.
4. You’re not a knucklehead
First Lady Michelle Obama recently commented that young people need insurance because they are “knuckleheads”. She went on to explain that they’re the ones who are “cooking for the first time and slice their finger open, they’re dancing on the bar stool.” I don’t know about you, but I’ve never sliced my finger bad enough to go to the hospital. Also, I don’t dance on bar stools, and even if I did, I’d have to take one mighty fall to suffer anything beyond a few bumps and bruises. Thus, your health is largely within your control, so if you avoid risky behavior you may be able to skip purchasing insurance.
Every individual’s situation is unique. That being said, if these reasons don’t apply to you, sign up for health insurance to avoid a catastrophic loss in the future.
Bisi Ibrahim writes for NerdWallet Health, a website that empowers consumers to find high quality, affordable health care and insurance. Take a look at NerdWallet’s Affordable Health Insurance Guide that covers the health insurance basics you need to know before purchasing a plan.
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Category: Personal Finance