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Individual Mandate

The Affordable Care Act (ACA) includes a requirement that all US citizens attain health care coverage (insurance), or pay a tax penalty. This includes both adults and children who are legal US citizens.

 

The law will also create an abundance of many new opportunities for people to obtain health insurance, such as new health insurance Exchanges in each state that will help individuals and small groups shop for insurance, tax credits to help defray the costs of purchasing private coverage for many, and an expansion of the Medicaid program in many states.

 

Fulfilling the Mandate

The mandate to obtain health insurance coverage will not change anything for many individuals in the United States. Many individuals already have a form of insurance that fulfills the requirement and will not be required to change it.

 

The requirement to have health insurance is satisfied (and therefore no tax penalty will be assessed) by any of the following:

 

  • Health Insurance offered by an employer
  • Medicare
  • Medicaid or the Children’s Health Insurance Program (CHIP)
  • TRICARE (for members of the military, service members, retirees, and their families)
  • The veterans’ health program
  • A grandfathered health plan that was in existence before the health reform law was enacted

 

Any combination of these sources of insurance will satisfy the requirement as long the combined coverage extends through the entire calendar year.

 

Any lapse in coverage could lead to tax penalties.

 

Those without one of these forms of insurance, or without consistent coverage for the entire year, or who are unhappy with the coverage they currently have, will have new options to obtain insurance though the Medicaid Expansion, and state Insurance Exchanges.

 

Exemptions

Certain groups will be exempted from the requirement to attain health insurance coverage. Among them are:

 

  • Members of religions opposed to acceptance of benefits from a health insurance policy
  • Undocumented immigrants
  • Incarcerated individuals
  • Members of Indian tribes
  • Those with family income level below the threshold for filing a tax return ($10,000 for an individual, $20,000 for a family in 2013)
  • Those who, after taking into account any employer contributions or tax credits, have to pay more than 8% of their income for health insurance

 

Tax Penalties

Those who do not obtain and maintain health insurance coverage will be subject to tax penalties, starting in the year, 2014. The amount of the penalties increases each year.

 

For 2014, the penalty is $95 per adult and $47.50 per child, up to $285 per family or 1% of family income, whichever is greater.

 

For 2015, the penalty is $325 per adult and $162.50 per child, up to $975 per family or 2% of family income, whichever is greater.

 

For 2016 and beyond, the penalty is $695 per adult and $347.50 per child, up to $2,085 per family or 2.5% of family income, whichever is greater.

 

Current Status

The individual mandate is scheduled to take effect in 2014.

 

Learn More:

 

The Requirement to Buy Coverage Under the Affordable Care Act – Kaiser Family Foundation

 

Quantifying Tax Credits for People Now Buying Insurance on Their Own  – Kaiser Family Foundation

 

Change in Pathways to Insurance for Persons with HIV Under the ACA- Kaiser Family Foundation 

 

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