Health care navigator Barb Silnes has been warning consumers that they will pay a tax penalty if they don't sign up for insurance very soon.
Some reply that they'll swallow the penalty — and maybe get coverage later this year.
But in most cases that won't be possible, Silnes tells them. If consumers miss their chance to enroll this time around, the next chance is mid-November, with a few exceptions.
"That's when I get their attention," said Silnes, who works out of the Jane Addams Resource Corp. in Chicago's Ravenswood neighborhood.
The Obama administration has long said that consumers must enroll in a health insurance plan by March 31 or face financial consequences. On Tuesday evening, the Washington Post reported that federal officials had granted applicants a little more breathing room. People who have begun to apply for coverage on the HealthCare.gov federal marketplace site, but do not finish in time, will have until about mid-April to ask for an extension.
But the basic equation doesn't change: Decisions made now on health insurance have an impact that stretches to tax time 2015.
The mandate that most people obtain insurance or pay a penalty is the linchpin of the federal health care overhaul. Without it, younger, healthier people might not enroll in high enough numbers to compensate for those who have preexisting conditions, who often cost the system more.
The Supreme Court focused on the tax penalty in its decision upholding the Affordable Care Act in 2012, ruling that while the federal government does not have the constitutional power to require people to buy insurance, it can levy a related tax.
For consumers, the flip side of the tax penalties is the law's tax benefits. To make insurance more affordable, the law qualifies most low- to moderate-income people for government credits that can be used to lower the cost of monthly premiums of plans obtained through the federal or state insurance marketplaces.
The basic penalty for going without insurance is $95 or 1 percent of modified adjusted household income, whichever is higher. But many complicating factors can increase the burden.
"The $95 thing is a myth for most folks," said Brian Haile, senior vice president for health policy with Jackson Hewitt Tax Service, which has made it a point of business strategy to help its customers avoid the law's tax penalties. He said most uninsured people will pay much more.
"If you choose not to get insurance, we respect that choice, but what we absolutely want to ensure is that you're not surprised," Haile said.
The mandate to buy insurance remains politically controversial. Some Republican members of Congress have argued that it has too many exceptions to be effective, including 14 hardship exemptions such as having a recent death in the family, being a victim of domestic abuse, being unable to pay medical expenses in the past 24 months or having a policy canceled and considering the available options unaffordable.
This month House Republicans voted to delay the so-called individual mandate by five years, though such legislation wouldn't survive the Democrat-controlled Senate or Obama's promised veto.
Here's what you should know about tax penalties and credits as you make your insurance choices:
•Some groups are exempt from the penalty. Those include people for whom the cost of health insurance would exceed 8 percent of household income in 2014, prison inmates, members of an Indian tribe or certain religious faiths with objections to insurance, people whose income is too low for them to file a tax return, people living in the U.S. illegally and those who qualify for a hardship exemption.
•If just one member of your family isn't covered, penalties apply. According to Haile, for a family of five with one uninsured adult whose modified adjusted gross income is $68,000, the penalty would be $477 for the first year. For example, a "boomerang" son or daughter age 26 or older has moved back home. Claiming that uninsured person as a dependent on your taxes could "cost you more than a spare bedroom," Haile said.
•Penalties get worse each year. For 2014 the tax penalty is 1 percent of modified adjusted household income or $95 per adult and $47.50 per child (up to a maximum of $285 per family), whichever is more. In 2015 penalties rise to 2 percent of income or $325 per adult and $162.50 per child; in 2016 and beyond it will be 2.5 percent or $695 per adult and $347.50 per child. (Higher maximum penalties will apply.) An online calculator that helps determine the likely penalty is available at taxpolicycenter.org.
•Missing next year's deadline means a double whammy. Your actions this spring seal your fate for the 2015 tax season. But if you also don't sign up in the next enrollment period, from Nov. 15 to Feb. 15, "you are locking yourself into two years of penalties," said Mark Ciaramitaro, vice president of health care enrollment services for H&R Block. If a taxpayer doesn't realize that until next April, it will then be too late to buy a policy.
•Many insurance buyers will qualify for tax credits. The credits, which vary according to income and family size, can go directly to the insurer, reducing your monthly bills. Or you can pay the full premium and get a lump sum as part of your tax refund next year. For a family of four, incomes from $23,550 to $94,000 may qualify.