Some may argue that the tax penalty for not being insured is too low to have any impact. The current penalty is $695.00 per adult and $347.50 for each child under eighteen. Maximum $2085 per family. While that is a hefty amount for most people, the amount is not the reason it is ineffective.
The real reason is that the penalty is meaningless for many people. First, there are a score of exceptions to the penalty. Then there is the way it must be collected. The taxpayer can voluntarily pay it or if the taxpayer is entitled to a tax refund, the IRS is allowed to deduct the penalty. That is the only way the penalty can be collected.
Believe it or not 75% of Americans receive a tax refund averaging about $2,700. Now you may conclude that most people (not qualifying for an exception) will therefore ultimately pay the penalty. Clearly that seems to be the case, but even if true it has little impact because the tax refund is “found money” and getting a bit less does not have the same impact as actually paying a penalty. Think of it this way. Which hurts more, having your premiums deducted from your pay so you never see it or being required to write a check each month to pay your premium. It’s a perception thing.