The new Health Care Reform Act is looking to make a lot of changes to our health plans and the Individual Mandate is going to be the biggest one.
Beginning with January 1st, 2014, all citizens will be required to have some sort of health insurance coverage unless they are exempted.
Those that do not meet the minimum standards will receive a fine as a penalty for noncompliance.
Why there has to be a Mandate
The reason why everyone is required to have some form of healthcare is to keep the prices of insurance plans affordable. This way, healthy people that would otherwise not require health insurance will also have to get a policy. This will distribute the costs over a wider area by having more people contribute, regardless if they are sickly or not.
Penalties for Not Having Coverage
In the first year of the bill, the fine for not having sufficient coverage will be 1% of the household income over the filing threshold for a family. In 2015, that fine will go up to $325 per person and 2% household income for a family. For 2016 and all fines thereafter, the penalty will be $695 per person and 2.5% of the household income over the filing threshold for a family.
There are situations where you can be exempted from paying the penalty. This can happen based on religious grounds, if you do not lawfully reside in the USA, if you are incarcerated, if your income is below the tax filing threshold, if you have received a hardship waiver or if you were only briefly uninsured for a period less than three months.
Approved Medical Coverage Only
In order to avoid a penalty, you must have minimum essential coverage. This form of coverage can include a grandfathered plan, a health plan sponsored by the government or your employer, an individual policy purchased from a carrier or any other form of coverage that is recognized by the HHS Secretary. This minimum essential coverage is different from the essential health benefits that are required to be included in health plans starting with 2014. Those benefits can be viewed in their entirety (click on Picture below), but a minimum coverage is not required to include all of them in order to be valid.
What if I can not Afford Health Insurance
Not all people will be able to afford the minimum essential coverage, but a lot of them will be eligible to receive subsidies from the government. These will come in the form of tax credits that get deducted directly from your monthly premiums. In order to receive these subsidies, your income will need to be between $11,490 and $45,960 or between $23,550 and $94,200 for a household with four members. Your exact income will also determine how significant those subsidies will be and if you want to know for sure, you can use this calculator below. It is also possible for you to qualify for certain free or low-cost healthcare programs such as Medicaid, Medicare and the State Children’s Health Insurance Program.
Individual Open Enrollment Periods
Your ability to buy Qualified Health Insurance is going to limited in the time frames that are available. Read our other blog article on the Individual Open Enrollment Periods and how they are going to affect your purchasing of Insurance.