Usually it’s safer to just get health insurance, rather than risking ending up having to pay doctors and hospitals thousands (or hundreds of thousands) of dollars. However, there is a case that is an exception to this rule. You might want to consider differently if you’re generally healthy and have a solid network of providers with whom you’ve pre-negotiated rates and caps on costs.

Even if this is the case though, do the math. Are you really saving more money paying the tax penalty, even when factors such as premiums, copayments, and out-of-pocket costs come into the picture? Would the insurance costs come up above or below the penalty costs? If they are still below, consider additionally that:

  • penalty costs go up each year (leading to yearly reevaluations)
  • with catastrophic events (usually unforeseeable), even the most careful planning can go awry

If you still end up deciding no to go with health insurance, I would up the payments you make into your 401(k) account. If you use the distribution to pay for medical expenses that are more than 10% of your income, you won’t have to pay early withdrawal fees to the bank. Never forget that medical expenses are generally high, and can quickly drain the bank.

Many Californians are overwhelmed by the task of figuring out the new affordable care acts and how to maximize the benefits for your family. As your agent, we can help. Email us at or receive a free premium quote. We will make sure that we find you and your family an affordable health plan in California for 2016. Remember the Open Enrollment period ends January 31st.