Anyone Ever take the Tax Penalty

Submitted by caper293 t3_10xwt96 in massachusetts

So I went shopping at the Health Connector site since my employer's health insurance does not meet the Mass Minimum Standards but it does meat the Federal HCA standards.

The cheapest plan offered to me is $400 a month!

They calculate this rate base on my yearly PRE-TAX salary not after my taxes are taken out. This is insane. They don't factor in rent/mortgage, your current debt, utility bills, etc.

They do factor student loan debt but at my age I paid those off 15 years ago.

Has anyone just forgone insurance and taken the tax penalty hit. At 400 a month I be paying close to $5,000 a year. This $400 month comes with a $9,000 dollar deductible, Meaning I have to pay up to 9,000 out of pocket before it kicks in. So basically it will cost me almost $14,000 before this insurance kicks in.

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ButtBlock t1_j7vco7y wrote

OP don’t do it. I know insurance sucks in the US, but the point of low premium insurance is to cover you for catastrophic expenses. In the US any of us could get into a car accident or have some unexpected illness, and bam just like that million dollar ICU stay. I’ve already been in two (thankfully minor car accidents), but literally, you could be completely healthy and still go bankrupt from a hospital stay. If you have no assets and your fine with that risk, sure, but it’s not worth it.

If it makes you feel better I live in PA these days, we pay 14k premium for a plan with a 12k deductible and 22k out of pocket maximum. I hate the healthcare system in this country. Literally think about leaving every year. Canada express entry my man. With what we all pay in the US, we could just increase federal taxes 5-10%, and then put all of the health insurance companies on a big rocket and fire it off into the sun so they can turn into hot ionized plasma. It should be a matter of national policy to have these companies bankrupt by the end of the 2020s.

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Kodiak01 t1_j7vy5qe wrote

My employer-provided insurance, I pay $106/wk. According to the required MA disclosures, my employer's portion for the year was ~$23,000 ($442/wk). If you go to the proper providers, it's a $0 deductible after copays.

What did this insurance get me? In December 2021 I had a blood clot in my shoulder. An ER visit and 3 inpatient stays later (8 days total, 4 procedures including thoracic surgery) racked up a ~$200k medical bill.

My total out of pocket: $1200.

This past year, even though our total rate went up by about $3k for health coverage (family plan), they ate the entire cost of it. That is like giving everyone a $1.50/hr raise across the board.

You can never have too much insurance. After an accident before the clot, I jacked up all my coverages including UIM to $500k; the cost to go up to that and even 1M from 100/300 was actually quite reasonable, a lot less than one would expect.

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caper293 OP t1_j7vcz2r wrote

yeah i am 47 now so i will get insurance

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benb777 t1_j7vjdqf wrote

This. All the dollar figures tossed around here are pocket change compared to what you can run up in the blink of an eye with an accident.

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JSchecter11 t1_j7weikb wrote

No one thinks it will happen to them...until you think about how many people you personally know that have been in an accident, had cancer, required any kind of surgery or ER visit. Your degree of separation from any of these things is ZERO and it absolutely could be you next.

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UniWheel t1_j7vkeja wrote

>What was the logic that the state decided to use pre-tax and not post tax salary?

Just about every tax-related rule is (ultimately) based on your adjusted gross income, not your "post tax" income

So for example, you pay federal taxes on the money witheld or that you're going to have to send in to use to pay those very taxes

You qualify for various refundable and non-refundable credits based on your AGI

In the year-end version, this is, too - MA may be using raw income for advance (montly) subsidy calculation but at the end of the year you can calculate if you're due additional reimbursement from the IRS, and that's based on your AGI relatively to the federal poverty level (up to several times it)

Your real beef should be with this employer that's only offering a sub-standard plan.

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caper293 OP t1_j7zgzu2 wrote

I work as a consultant as w-2 with a company. Most consultants get crap health insurance from their employer. I went the consultant route because you make more money upfront as a single person. But your insurance benefits are minimal.

So in my current role I had for 5 years if I went none consultant but fulltime with the company my salary would have been 70K but as a consultant I started at 110K, Today I make 125K pre-tax but that position would probably pay me close to 100K if I was fulltime

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TomBirkenstock t1_j7v3afk wrote

I don't take the tax penalty, but I'm paying nearly a thousand dollars a month on health insurance for my family because I make just a tad too much to get any help through the Health Connector. Outside of my mortgage, it's my biggest expense.

However, I was talking to my father in law who is going to retire in his fifties because he's a fireman, and he's looking at a thousand a month just for him. He's in Ohio. So, I guess it could be shittier, but I know that's not much consolation.

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UniWheel t1_j7vm4xq wrote

> I make just a tad too much to get any help through the Health Connector. Outside of my mortgage, it's my biggest expense.

it may be worth the extra time when you do your taxes to verify that you didn't end up actually qualifying for an after-the-fact premium tax credit, even if you didn't quality for assistance ahead.

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jp_jellyroll t1_j7v38nj wrote

For what it's worth, the deductible and OOP max only come into play when you're actually undergoing expensive procedures -- child birth, surgery, rehab/PT, etc.

Otherwise, if you're young / healthy / no kids then regular preventative care as part of most coverage is very cheap (if not covered entirely). It's really ~$5k/yr to carry insurance and no risk... versus the tax penalty plus a massive financial risk of being bankrupted by a hospital stay. These medical procedures ain't cheap and they itemize everything.

I think they billed us for "fresh air" when my daughter was born.

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saywhat1206 t1_j7v0rki wrote

My husband and I took the tax penalty for 2021 and we will take it again for 2022. We had to pay $1500 for the 2021 penalty. We were hoping to make monthly payments but they charge a HUGE interest rate. First month we sent $100 and they charged us $64 in interest the next month. Ended up putting it on a credit card and then transferred that balance to another card offering 0% for 12 months. The calculations you mention are the same for us - deductibles are out of control. Husband did sign up for insurance for himself for 2023 - premiums are $50 a month for him, BUT if he adds me to the plan, it is $400 a month to cover me. When I checked with the Health Connector the payments for me are also $400 a month. We cannot afford this. Healthcare is such a ripoff and I am pissed that we live in 1 of only 5 STATES that pull this penalty crap.

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caper293 OP t1_j7v4qdd wrote

What was the logic that the state decided to use pre-tax and not post tax salary?

Why does the state not include rent/mortgage and utilities but it includes student loans?

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saywhat1206 t1_j7vew6s wrote

It is ridulous. Both my husband and I are in our early 60s and have health issues that just go untreated.

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MechanicalBirbs t1_j7w2cjg wrote

Its honestly criminal that they do this. They basically punish you for having even a modicum of success.

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settimo_cielo t1_j7wexgt wrote

When this was first required I couldn't afford health insurance through my employer. When I was doing my taxes myself online I had been able to claim religious exemption and avoid the penalty with no proof needed. I don't know if this is still a thing but it got me through a few years until I got a better job with affordable insurance.

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Illustrious-Mix9904 t1_j7z2s98 wrote

Please don't! Get some / any insurance.. it might sound like a lot but regular health exams are probably covered and even if there is no catastrophic incident that requires it, you will benefit from medical exams. Best wishes

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Mountain-Ice4687 t1_j7xf11a wrote

I wouldn’t recommend it.

My wife works for a hospital. Salary isn’t great, but the health benefits make it worth it. $80 bucks a week for her plus me (spouse) with no deductible and copays that range from 15-25$.

It’s insane to think of it as a win, but when the alternative is my insurance at like $600 bucks a month with a 3k deductible and $50 co pays, it adds up

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rebel9800 t1_j7ywi3x wrote

You can blame all the idiots here in massachusetts back in 2007 that voted for this crap under Romney. Like most things in MA, people are asleep at the wheel.

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caper293 OP t1_j7zgsn3 wrote

it's still cheaper with the law. the part of the law I hate is the penalty

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rebel9800 t1_j83b475 wrote

Not sure if you voted for it back in the day, but people did. Just like the Obamacare stuff. I think now most people realize what a joke it was.

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AnyRound5042 t1_j7vlr57 wrote

I was uninsured for most of covid but I just didn't do my taxes

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caper293 OP t1_j7vmao6 wrote

that’s not good..do you not owe government money?

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