The Individual Mandate

There were 37 million uninsured Americans in 2010. One of the main goals of Obamacare is to provide greater access to health care, i.e., dramatically reduce the number of people without insurance.Obamacare also means more benefits; the most important new benefit is that no coverage can be denied because of pre-existing conditions. But without pre-existing conditions, the insurance risk pool become weaker. In other words, most policyholders will be sick people who need assistance, and the insurance premiums will be very expensive. Adding many of the 37 million people (numerous of these are young and healthy) will avoid this tendency and dramatically strengthen the risk pool. This may happen only if uninsured people are required to get insurance (rather than wait until they get sick); and it will bring down the average cost of insurance for all people. This requirement is known as the individual mandate.  In June 2012, the Supreme Court upheld the right for an individual mandate.

Individual Mandate Penalty and Government Assistance

Most insured Americans will be covered either by Medicaid expansion or through subsidies they will be entitled to by purchasing an insurance policy on the Health Insurance Marketplace. Only 25% of uninsured people will need to buy a policy through exchanges without subsidy – see Table 1. (All tables below are taken from ObamaCare Survival Guide. The latest data have been used, whenever available). Generous government assistance will be provided to families with different income levels – see Table 2.

Table 1.  Uninsured Americans Mapping into Obamacare

Key Sub-Groups Total in 2010 Percent of U.S. Population
Uninsured Americans in 2010 (Total People) 37 Million 12%
Covered by Medicaid Expansion 14 Million 4.5%
Can buy through Marketplace (with subsidy) 14 Million 4.5%
Can Buy through Marketplace ( without subsidy) 9 Million 3%

Table 2.  Obamacare Eligibility for Government Assistance (under age 65) based on 2016 Poverty Guidelines

Family of 4 Income Level Percent of Federal Poverty Level Individuals Can Get Coverage In Government Subsidies?
Above $97,200 Above 400% Their State’s Health Marketplace NO
Up to $97,200 Up to 400% Their State’s Health Marketplace YES / Premium Tax Credit ONLY
Up to $60,750 Up to 250% Their State Health Marketplace YES / Premium Tax Credit and Cost-Sharing Reductions
Up to $33,534 Up to 138% Medicaid (for states that approved Medicaid expansion) YES
Up to $24,300 Up to 100% Medicaid (for states that did NOT approve Medicaid expansion) YES 

 

In return, the individual mandate asked everyone to either have health insurance or pay a penalty. Insurance can be obtained through health plans available in the Health Insurance Marketplace, an employer-sponsored health plan, or health plans in the individual markets. In addition, public plans such as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), TRICARE and Veteran’s plan are available for those who qualify. There are also exemptions from the individual mandate; including people who are not required to file taxes, people who are without health insurance for three months or less, and people who truly cannot afford to purchase coverage or can claim general hardship under unusual circumstances. Otherwise, penalties should be paid in the form of either a flat fee or percentage of the household income that is above the tax return filing threshold – whatever is greater. Under no circumstances will penalties exceed the specified maximum – see Table 3.

Table 3. Individual and Family Mandate Penalty for not obtaining health insurance

Year Flat Fee ($)
   Percent of Household Income above the Tax Threshold: Maximum per Family
Adult Child
2014 $95 $47.50 or 1% $285
2015 $325 $162.50 or 2% $975
2016 $695 $347.50 or 2.5% $2,085
After 2016 Adjusted For Cost of Living

 

In 2015 the fee for uninsured adult is $325 and for uninsured children is $162.50, or 2% – whatever is greater. The most a family would have to pay in 2015 is $975 – three time adult’s penalty. Those amounts go up in 2016.  In 2016 the fee for uninsured adult is $695 and for uninsured children is $347.50, or 2.5% – whatever is greater. The most a family would have to pay in 2016 is $2,085 – three time adult’s penalty.  Remember that someone who pays the fee WILL NOT get any health insurance coverage.

You pay the fee for 2015 when you file your 2015 Federal Income Tax return in 2016; you pay the fee for 2016 when you file your 2016 Federal Income Tax return in 2017.

Update: The Obama administration will allow people having health insurance plans that don’t comply with Affordable Care Act (ACA) to keep them (without penalty) through October 2017, as long as states will allow it. This extension is just for existing members; no new customers will be entitled to enroll in these policies.

Let Liberty Medicare help you to get coverage through the Health Insurance Marketplace

Liberty Medicare is here to help you learn about Marketplaces and assist with eligibility determination for enrollment in a Qualified Health Plan (QHP) and for insurance affordability programs, which include Medicaid, CHIP, premium tax credit, and cost-sharing reductions. We will help you to compare plans, and enroll in coverage. All of our services are offered to you at no cost.

Liberty Medicare represents many well-known Health Insurance Marketplace providers in Delaware, Illinois, Maryland, New Jersey, Ohio, Pennsylvania, and Virginia.  Learn more about all of the benefits of working with Liberty Medicare.

If you are considering buying insurance in the Health Insurance Marketplace, let us guide you. To see real quotes from insurance providers visit Federal or State Marketplace, fill out our Individual Health Quote form, or give us a call at 877-657-7477.