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Sunday, December 4, 2016

By Colleen Diskin, The Record

HACKENSACK, N.J. — On Monday, the federal government shifts from being a cheerleader for the law requiring all Americans to buy health insurance to an enforcer with the power to tax those who don’t comply.

Those who remain uninsured after that date and who don’t fall into an exempt category, could face a tax penalty — and it may not be as small as they expect.

The oft-cited minimum tax penalty set by the Affordable Care Act is $95 a year. But that’s just the rate for single adults earning less than $19,500 a year. Individuals and families earning above that could end up paying hundreds or even thousands of dollars if they don’t buy a health insurance policy by the deadline on Monday.

The tax rate will double in 2015 and grow each year after that.

“The penalties can be bigger than a lot of people might realize,” said Roberton Williams of the non-partisan Urban Institute and Brookings Institution Tax Policy Center, whose organization has added an “ACA tax penalty calculator” to its website to help people determine their potential tax penalty.

Since the launch last year of the federal and state marketplaces for health insurance under the Affordable Care Act, numerous advertisements and outreach events have attempted to educate the public about the benefits of buying policies under the law. The government has promoted its carrot — subsidies to help make the insurance affordable — in its attempt to get people to sign up for coverage. Now, it’s time for the stick.

It was the threat of this penalty that persuaded 25-year-old Amanda Vangrouw of Wayne, N.J., to seek out an enrollment center this past week to find out her options for coverage.

A day-care worker and William Paterson University student, she said she hasn’t been able to afford health insurance for the past six years. She went to the center Tuesday to find out if she was eligible for a subsidized policy or an exemption from the tax penalty if she couldn’t afford insurance through the program, known as Obamacare.

Vangrouw ended up being advised that she was eligible for free coverage under New Jersey Family Care, the state’s expanded Medicaid program.

But others are doing their own calculations, weighing the cost of a paying insurance premiums — say, $2,628 for a single person earning $50,000 — against the potential tax — $399 in 2014 — and opting not to enroll this year because its still cheaper to take the tax hit.

Williams encourages people to look at the overall financial benefit of having insurance to cushion themselves against unexpected health care costs rather than just comparing premiums and penalties. “The premiums are almost certainly bigger than the penalty, but if you pay the premium, you have insurance,” he said “The calculus is not which is bigger, it’s which has the bigger benefit.”