UPDATED Mar. 15, 2019. There were 37 million uninsured Americans in 2010. One of the main goals of the Affordable Care Act (ACA) is to provide greater access to health care, i.e., dramatically reduce the number of people without insurance. ACA 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 plan 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 ACA
|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. ACA 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 $24,300||Up to 100%||Medicaid (for states that did NOT approve Medicaid expansion)||YES|
In return, the individual mandate asked everyone to either have health insurance or pay the penalty. Insurance can be obtained through health plans available in the Health Insurance Marketplace, an employer-sponsored health plan, or health plans in the individual markets. In addition, public plans such as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), TRICARE and Veteran’s plan are available for those who qualify. There are also exemptions from the individual mandate; including people who are not required to file taxes, people who are without health insurance for three months or less, and people who honestly cannot afford to purchase coverage or can claim general hardship under unusual circumstances. Otherwise, penalties should be paid in the form of either a flat fee or percentage of the household income that is above the tax return filing threshold – whatever is greater. Under no circumstances, will penalties exceed the specified maximum – see Table 3.
Table 3. Individual and Family Mandate Penalty for not obtaining health insurance
|Year||Flat Fee ($)
||Percent of Household Income above the Tax Threshold:||Maximum per Family
|After 2016||Adjusted For Cost of Living|
For the 2018 tax year, the annual Individual Shared Responsibility Payment is the greater of:
- 2.5% of the taxpayer’s household income that is above the tax return threshold for the taxpayer’s filing status; OR
- The taxpayer’s flat dollar amount, which is $695 per adult and $347.50 per child, limited to a family maximum of $2,085.
The total payment amount was capped at the cost of the national average annual premium for a Bronze-level health plan available through the Marketplace in 2018.
The tax penalty for not having minimum essential coverage was eliminated beginning January 1, 2019.
US Government Sources
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