Uninsured in 2016? Coverage might be cheaper than the penalty

Are you among the shrinking number of Americans without health insurance? If so, you could face a hefty penalty in 2016. The cost of going without coverage is $695 or 2.5% of your income, whichever is greater. It will be added to the amount you owe in federal income tax when you file your return for the year.

That's a lot of money to pay when you get nothing in return. Many people choose to accept the penalty because they think it's cheaper than the cost of coverage. But a lot of them may be wrong.

A new study by the nonprofit Kaiser Family Foundation compared the cost of the penalty with the cost of the least expensive plan available for the 11 million people who are eligible to purchase coverage on an insurance exchange. The study found that for almost 40% of them, the cheapest coverage would cost less than the penalty.

That means these people would not only save money by enrolling in a plan, they would gain something extremely valuable – protection from large medical bills.

Most of the people who could save money by obtaining coverage are eligible for a subsidy to help with the cost. However, about 6% of those who earn too much to receive a subsidy would still come out ahead by purchasing insurance.

You can go without coverage for as long as three months during the year without incurring the penalty. That means there is still time to avoid it for 2016.

If you do not already have coverage, the options available on the insurance exchange in your state are worth looking into (In Pennsylvania and New Jersey, you can find them on healthcare.gov.) You might not only save money but also gain some financial peace of mind.

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