As tax day rapidly approaches, some Americans are stumbling across a new line on their tax forms: a penalty for not having health insurance last year. This fine, a key component of the Affordable Care Act, was designed to push people to obtain healthcare coverage. But in practice, it’s not exactly spurring people to sign up, raising questions about what other factors are prompting people to forgo insurance.

The fine is $95 per person or 1 percent of a person's annual income, whichever is higher. The tax is slated to go up next year to $325 per person or 2 percent of annual income. 

“I don’t think the fine has been the nudge factor that it was designed to be,” said Will Gonzalez, executive director of Ceiba, a coalition of Latino community organizations in Philadelphia that offers free tax preparation as part of its services. “I still think that there’s a need to help people understand the [enrollment] process more,” he added.

Nearly 90 percent of Americans had health insurance this year, an all-time high, suggesting the Affordable Care Act has made great strides in making coverage more accessible and affordable. Since the law was implemented, an estimated 32.2 million people have signed up for plans through the healthcare exchanges it created. Now, insuring the remaining 11.9 percent of adults who don’t have health coverage is the primary challenge.

For those who wanted to buy healthcare coverage through Obamacare, the period to do so initially ended Feb. 15. But the federal government, as well as several states that run their own exchanges, ultimately extended the enrollment deadline to the strategic date of April 30, two weeks after taxes are due. Governments also made it easy for people to qualify for the special enrollment period in case paying the healthcare penalty this year inspired them to sign up for insurance and avoid paying even more next year.

“If you owe a fee on your taxes for not having health coverage in 2014 and don’t yet have health coverage for 2015, you may still be able to get coverage for 2015,” a post on said. “The Health Insurance Marketplace is providing individuals and families who are subject to the fee when they file their 2014 taxes with one last chance to get covered for 2015.”

But for those who have yet to sign up for coverage, being forced to pay a tax penalty doesn't seem to be a tipping point. A survey published in February by McKinsey, for instance, found that just 12 percent of adults would choose to buy health insurance upon learning they had to pay a penalty for going without it.

“I have not seen a massive uptick,” Neil Deegan, the Pennsylvania director for the nonprofit Get Covered America, which works to help people gain health insurance, said of people signing up for insurance during the special enrollment period. “It’s a slower rate” than ordinary enrollment periods, he said.

A Daunting Process

One reason people don’t sign up for health insurance is because they give up on the complicated process. “The difficulty of the system was very frustrating to people,” even for clients who did have health coverage, Sherry Diamond, president of Tax Stop Inc., a tax preparation company in New Jersey, said. “The whole signup process needs to be easier to manipulate.”

Gonzalez, whose organization works primarily with low-income Latino residents in north Philadelphia, said that signing up for insurance required time as well as an understanding of the process. “A lot of low-income people have very busy lives,” he said. If they don’t have the time to devote to working through a system that has had its share of bugs and quirks, frustration might deter them from signing up.

“We’ve had a lot of people who started an application [for health coverage] and found it difficult and needed help,” Steve Wood, a coordinator with the community-based organization ACR Health in upstate New York, said. At other times, people don't sign up because they don’t know what coverage options were available to them. They might not realize they qualify for subsidies that significantly cut down on monthly premiums, for instance.

Wood said enrollment for health insurance during the extended period had been fairly steady, but some people nevertheless opted not to sign up. “Sometimes people are overextended,” he explained. If they have student loans, mortgages and other bills to pay, “adding another on top is not always feasible for them.”

When the complexity of the signup process or a lack of knowledge about it deters people from signing up, it’s a sign that more work needs to be done, Maura Collinsgru, a health policy advocate at New Jersey Citizen Action, said. “I have met people who have chosen not to enroll either because they didn’t understand that they could get assistance, or they didn’t know how to go about picking a plan,” she said. “We need to continue to do more intensive outreach.”

Weighing Health Against Cost

For the young and healthy, buying health insurance may also seem irrelevant, especially if the annual tax penalty appears comparatively cheaper than monthly premiums.

“I’ve seen people say, ‘I’m not going to get health insurance. It’s cheaper to pay the fine,’” Gonzalez said. Often, he said, the decision to buy – or forgo – health insurance depends on a person’s health at the moment. “The younger folks say, ‘You know, what do I need insurance for?’” He said those who have health issues are more likely to sign up for insurance.

Because people don’t expect to be hit with a health catastrophe or accident, having to pay a penalty doesn’t seem to outweigh the cost of insurance. “For some people, their income may be high, and they perceive themselves as healthy,” Woods said. 

Few of those who had to pay the penalty were surprised by it, said Diamond, the tax preparer. Clients will say, “Yeah, I know, I’ve got to do this,” she said, and she’ll remind them that the federal signup period has been extended through April. “They sound like chastised children,” she said.