Should you pay the penalty for going uninsured?

By Lacie Glover 

Under the Affordable Care Act (ACA), the deadline for most people to sign up for health insurance is Monday, March 31 (except those who request an extension), but not everybody has decided to sign up.

As zero hour approaches and last minute buyers scramble to get covered, we are seeing a surge in online marketplace traffic. Others are opting not to get insurance and to pay the penalty instead. Which choice is right for you? Like most things in life, there is no one answer that works for everybody.

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Here’s what to know before making your decision:

The actual cost of the penalty for you

You may have heard that the penalty for not signing up in 2014 will be $95, but that’s just the minimum for individuals. For singles making more than $19,500 in 2014, the amount (deducted from their 2014 tax return) will be higher—1% of your taxable income in 2014, to be exact. For a family of four, the minimum is $285 this year.

Next year the minimum penalty for individuals will more than triple to $325, and in 2016 it’ll double again to $695. Families will see similar increases, with the minimum next year hitting $975, and $2,085 in 2016. A study by NerdWallet Health predicts that, for an individual who never gets insurance, the Obamacare penalty will cost a minimum lifetime total of $36,556. For a family of four it’ll be $126,231. A higher income means a higher penalty, so you’ll want to reevaluate your decision each year.

The financial risk of going without insurance

Many large medical bills are the result of an emergency, and nobody plans on getting hurt. Still, going without insurance is always a risk. All it takes is a little bad luck to land even the healthiest among us in the hospital where the average cost of a 3-day stay is $30,000. On top of that, insurance companies negotiate lower rates for their policyholders so the uninsured may be billed at a higher rate for many tests and procedures.

Even if you don’t end up in the hospital for an extended period, common outpatient services like knee or hip replacement surgeries are expensive, averaging $50,105 nationwide—a bill you won’t want to face on your own. Even more common is having a baby, which will run you around $30,000 for a natural delivery and $50,000 for a cesarean, on average. If pregnancy is in your family’s plans, you’ll want to look into coverage rather than taking the penalty—especially since maternity care is now covered by all qualified health insurance plans.

Whether it makes more sense to hold off this year

Getting insured in 2014 will cost many healthy young adults five times as much as it will to go without coverage, including paying the penalty and visiting the doctor sparingly. Even those uninsured who visit the emergency room once may pay less for health care than their insured counterparts over a year. As penalties increase annually, however, buying insurance will become increasingly financially sensible.

The new healthcare marketplace relies on healthy young adults to sign up in order to keep premiums low. This is for good reason: healthy people under 35 require fewer insurance payouts and provide insurance companies with low-risk revenue. That’s great for them, but what about you? If you are one of these healthy individuals, opting in may not be the best financial option for you—at least not this year.

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Lacie Glover writes for NerdWallet Health, a website that empowers consumers to find high quality, affordable health care and insurance.