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The Dumbest Thing I've Heard About Obamacare

Editor's note: This article was based on a miscalculation, in which an annual fine was identified as a monthly fine.

The author and TheStreet regret this error.  The author has reworked the story to address all the items in question.

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NEW YORK (TheStreet) -- I was poking around TheStreet.com the other night, checking out different categories I don't often explore and uncovering pages I would've never seen by outright searching for them. 

It wasn't boredom, but curiosity. I wanted to know what else was out there. I noticed that TheStreet has a nice collection of work that isn't stock market related, which is good because stocks, bonds and commodities aren't the only things we care about.

Some interesting spots I found were Running a Business, Travel and Leisure, and plenty of fascinating articles pertaining to beer by contributor Jason Notte.

But one article in particular not only caught my attention, but flabbergasted me, as well. In Forget Obamacare: One in Four Americans Say They'll Pay the Fine, it was revealed by Hal M. Bundrick that, as the title says, 25% of us would rather pay a fine and have no insurance than sign up for insurance mandated by the Affordable Care Act. 

Are you kidding me?

That is quite possibly one of the dumbest things I've ever heard in my life. I forced myself to read through most of the comments -- which seemed to have doubled since my reading -- mostly centered around political affiliation, the president's competency and insurance approval ratings. 

The government's Web site is atrocious. It never should have happened like that. Because Obamacare is such a controversial topic and faces so much opposition, the Web site was bound to be an instant match in the oil can if anything went wrong, and it did in the worst possible way. 

I'm not going to entrench myself in a political battle, arguments for which rarely make any logical sense anyway. Most just pick a side and constantly blab away about things they have little working knowledge of. 

Regardless of one's political stance -- Democrat, Republican, neither or somewhere in the middle -- it makes zero sense to pay the fine rather than to sign up for coverage. From the article:

"The penalty in 2014 for remaining uninsured is $95 per adult and $47.50 per child or 1% of taxable income (up to $285 for a family), whichever is greater."

"According to the nearly 4,000 interviews conducted with uninsured Americans since September, more than one quarter (26%) under the age of 30 say they are more likely to pay the fine, compared with 30% of those aged 30 and older."

A married couple with one child can plan to pay $237.50 per year, assuming their taxable income doesn't warrant a steeper penalty. The refusal to pay will amount to a maximum of $712.50 while still not providing any coverage. That's not too bad for year one.

Maybe those who plan to hold out are doing just that: Planning. Will they actually go through with it? I'm sure some will at first or for a while. Even the diehards might make it through 2014, but I'd be surprised to see many make it much further.

In 2015, the fee climbs to $325 per adult and half that for children. Our three-person family from a few paragraphs ago would be coughing up $812.50 in minimum fees if they chose to continue their rebellion.

Remember, this is assuming the fee is cheaper than a percentage of their income. However, instead of the 1% of taxable income fee from 2014, it climbs to 2% in 2015. That makes the maximum fee $2,437.50 for the three-person family.

In 2016, the fee chart just gets ridiculous: $695 per adult or 2.5% of taxable income. The family in our example can now set aside a staggering $5,212.50 per year in maximum fines and still have no health coverage. That's another mortgage payment for crying out loud! After 2016, the fee increases at the rate of inflation, but even if it didn't, this is too much for most families.

What's the point? Sure, maybe the first year is cheaper to pay the fine than to pay for insurance. Same goes for the "get-on, get-off" crowd that I've been hearing about -- those who plan to get insurance when they need some health issue looked at, and then ditch the plan after it's been medically addressed. 

Regardless, by the time these protesters get to 2015 or 2016, the wad of cash they're shelling out is astronomically stupid by any means. 

Of course, whether that fee will be paid continues as a raging debate. The penalty appears when one files their tax return and the argument hinges on whether the fee is only assessed if there is a tax return from the government to be subtracted from. The IRS FAQ can be read here.

I get that there's a ton of friction and debate raging on about the Affordable Care Act. But despite one's political allegiance, it makes no sense for families to waste their hard-earned dollars by paying fees. 

To those who fancy themselves as stubborn protesters, here is my message: 

Medical expenses are the leading cause of bankruptcy in the United States. So as you remain uninsured -- the equivalent to a ticking bankruptcy time bomb -- you can rest assured that even if you or your immediate family never has a medical emergency, your stubbornness will deeply bleed your long-term earnings power for you and your family. 

Again, I'm not picking sides on the Act or saying one side is ride or wrong. Simply put, I'm hitting on those who plan to waste their money in a pity attempt of protesting. An act of which will only hurt themselves and will make no difference to the long-term outcome of the law. 

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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