Affordable Care Act: Penalty applies even if you pay your own medical bills

Can I refuse to pay the penalty if I pay all of my medical expenses out of pocket? Let’s say I’m worth millions of dollars and I don’t want any health insurance company to have access to my health records. Can I just pay everything out of pocket instead? If so, I shouldn’t have to pay anything for not being enrolled in coverage because I’m technically covered by myself!

Private Person

Dear Private Person,

Self-insuring – paying all of your own medical bills – does not allow you to escape the requirement to have health insurance. Even if you were worth millions, it is possible to spend millions on medical care and still be alive. You might still not have enough money in other words to pay all of your own medical bills.

The penalty is a percentage of your modified adjusted gross income (MAGI), not a percentage of your assets. For 2014, it is one percent of your MAGI. It scales up to 2.5 percent in 2016. There are plenty of legal ways to minimize your income, and therefore minimize your penalty.

You might want to consider having the insurance, so that you do not have to part with all of your money. You can decide to submit or not submit your bills for the insurer to pay.

Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.