Expert responses to commonly asked questions about the individual mandate


Answers to commonly asked questions about the individual mandate. (iStock)
September 30, 2013

Tuesday is the day: If all goes as planned, that’s when the health insurance marketplaces, the centerpiece of the 2010 Affordable Care Act, are scheduled to go live.

The marketplaces, also known as exchanges, are designed to help people meet one of the most controversial requirements of the health law: the “individual mandate” that requires them to secure coverage. Assuming technical or other glitches don’t impede the rollout, people without insurance can shop on the marketplaces over the next several months for coverage that will take effect in January.

Here are responses to some common questions about the individual mandate.

What is the individual mandate?

The individual mandate requires you, your children and anyone else that you claim as a dependent on your taxes to have health insurance in 2014 or pay a penalty. That coverage can be supplied through your job, public programs such as Medicare or Medicaid, or an individual policy that you purchase. The health law is setting up online health insurance marketplaces to help you shop for plans. The www.healthcare.gov Web site can help you get started.

How do I satisfy the mandate?

Health coverage provided through a job-based plan (including COBRA or a retirement plan), policies that you bought for yourself or your family, Medicare (and Medicare Advantage), Medicaid, Children’s Health Insurance Program (CHIP), some Veterans Administration health programs or Tricare will satisfy the mandate.

If you are uninsured or thinking about switching plans, you can shop for coverage through the online marketplaces beginning Tuesday. The District and 16 states, including Maryland, will run their own marketplaces. In the other states, the federal government will run them or work jointly with the states. These marketplaces will alert people with lower incomes that they are eligible for Medicaid.

The marketplaces will offer tax subsidies to reduce premiums if your income is less than 400 percent of the federal poverty level ($45,960 for an individual and $94,200 for a family of four in 2013). Subsidies will also reduce the deductibles, co-payments, coinsurance and total out-of-pocket spending limits for people with incomes up to 250 percent of the federal poverty level ($28,725 for an individual and $58,875 for a family of four in 2013).

Although the law takes effect Jan. 1, the initial enrollment period continues through March 31. If you get insurance by then, you will not face penalties for not being insured.

What happens if I don’t get coverage?

If you do not have the minimum level of coverage and do not qualify for an exemption, you must pay a penalty at the end of the tax year. The penalty for the first year is up to $95 per adult and $47.50 per child, or 1 percent of family income, whichever is greater.

The fine, however, increases over time; in 2016, it will be as much as $695 per adult and $347 per child (up to $2,085 for a family) or 2.5 percent of family income, whichever is greater. The amount you owe will be prorated to reflect the number of months you were without coverage.

Are there any exceptions to the mandate?

Yes. People who cannot afford coverage because the cost of premiums exceed 8 percent of their household income or those whose household incomes are below the minimum threshold for filing a tax return are exempt. People with certain hardships, including those who would have been eligible for Medicaid under the health law’s more expansive rules but whose states chose not to expand their programs, also are exempt.

Other exempt groups include prisoners, Native Americans eligible for care through the Indian Health Service, immigrants who are in the country illegally, people whose religion objections to having insurance coverage and individuals who experience a coverage gap of less than three consecutive months.

How do I report my coverage or exemptions to the government?

You will not have to report your coverage or exemptions until you file your 2014 income tax return, which is due in April 2015. Insurance providers will also be required to help their plan members report their health coverage. The Internal Revenue Service says it will put out details later about how the reporting will work.

How do I apply for an exemption?

If you are seeking an exemption based on incarceration, membership in an Indian tribe or health-care sharing ministry, you can apply through the health insurance exchanges or make a claim when you file taxes. If you are claiming economic hardship or a religious exemption, you must get an exemption certificate from the online insurance exchange. If you are claiming that coverage is unaffordable, that you are in the United States without proper documentation or that you had a coverage gap of less than three months, you can make the claim when you file your 2014 taxes in 2015.

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

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