Understanding Obamacare/Affordable Care Act: Penalties you'll pay if you don't get insurance

CLEVELAND - In less than a week, you can start to sign up for and buy health insurance through the exchanges set up by the Affordable Care Act.

As we continue our special reports called "Understanding Obamacare", we explore the penalties if you don't get insurance. You pay fines for speeding or breaking the law, and with the Affordable Care Act it's no different.

Here's how it breaks down. The penalty for an adult that is not exempt is $95, per child it's $47.50 and for a family it's $285 or 1 percent of the family income, whichever is greater.

The government is giving you a bit of a break for the first year in 2014 because all of this is so new, but a local expert said that break is a "worry" for the Obama administration.

Director of Strategy for Medical Mutual of Ohio Gregory Young said the initial penalty structure could pose an issue for one of the overall goals of the law: getting people signed up.

"The concern all along has been… that penalty is not high enough. It's not significant enough to push people to buy coverage," Young said.

Young told us if the penalty is not stiff enough, then the young, healthy people in our country may not get onboard and that could have an impact when you sign up through the exchanges.

"You can't just have elderly people or sick people in the exchanges," Young said. "It's going to drive that cost up in those exchanges and really, really hamper the ability for them to function as envisioned."

By 2016, the penalties do jump to $695 per adult, $347 per child and $2,085 or 2.5 percent of family income whichever is greater.

Professor Gwendolyn Roberts Majette from the Center for Health Law and Policy at Cleveland State University said the idea is to collect the penalties come tax time.

"Basically (this) is going to be through the IRS and through the tax code, and when you file your taxes," Majette said.

She also said just like other tax-based issues, there will be exemptions available.

"So, if you have a religious objection to purchasing insurance, then you won't suffer a penalty," Majette told us. "Native Americans get some exemptions because there's a totally different health care system to help provide for them."

She went on to say if you're too poor and don't qualify for the Medicaid program or assistance and you can't afford insurance, you will be granted an exemption.

Another important point is that in order to avoid the full penalty, you have to sign up for insurance by Dec. 15 even though the open enrollment lasts until March 31. Your insurance has to be in place by Jan. 1, 2014 and Dec. is the cutoff date to make sure that happens.

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