Under the ACA, most people in the U.S. must be covered by insurance or pay a penalty at tax time. The goal is to prod healthy people to enroll in insurance plans — especially “young invincibles” who think they don’t need insurance. Such healthy people tend to rack up few medical expenses, and their premiums help cover medical care for sicker people. ACA supporters say that getting the right balance in the insurance “risk pool” is critical because it helps insurers comply with the law’s requirement to cover people with costly, preexisting medical conditions.
The mandate, though, is the least popular part of the law with the American public. Critics say that it is coercive and that forcing everyone into the same risk pool drives up premiums for the healthy individuals. Republicans have been saying for years that they want to eliminate it. Already, an executive order on the ACA issued by President Trump hours after he took office could make it easier for agencies to not enforce the requirement, though none have begun to take such action so far.
For now, the 2016 penalty is the greater of the following: 2.5 percent of household income above a certain threshold or $695 per uninsured adult and $347.50 per child, up to a maximum of $2,085 per family. Some ACA supporters think that penalty is too low to motivate everyone eligible for coverage through the marketplaces to get it.