Friday, March 28, 2014

What’s the “individual mandate”?

Our consumer advocates have been getting a lot of questions about the individual mandate, which is the penalty for failing to obtain health insurance under the Affordable Care Act (ACA), which is a federal law. In Washington, the last day to enroll in a health plan is March 31, only four days away.

If you qualify for free or subsidized health care, enroll through Washington Healthplanfinder at www.wahealthplanfinder.org.  People qualify for help if their 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). If your income exceeds that threshold, you may wish to contact an insurance broker or agent directly.

Those who qualify for Washington Apple Health (Medicaid) may continue to enroll throughout the year. There are also certain events that allow you to enroll or change your enrollment throughout the year. Read more about qualifying events.

With a few exceptions, people who do not purchase an ACA-compliant health insurance plan will pay a penalty when they file their 2014 federal income taxes. The penalty is 1 percent of your income or $95, whichever is greater. The penalty increases yearly through 2016, when the penalty will be the greater of 2.5 percent of your household income or $695 per adult and $347 per child. If you lacked coverage for part of the year, your penalty will be prorated.

There are exemptions to the penalty:
  • People who cannot afford coverage because the cost of premiums exceed 8 percent of their household income.
  • People whose household income is below the minimum threshold for filing a tax return.
  • People who are incarcerated.
  • Members of federally recognized tribes.
  • People who are eligible for care through the Indian Health Service.
  • People who live in the United States illegally.
  • People whose religious beliefs prohibit having health insurance and are recognized as such by the Social Security Administration.
  • People who belong to a health care sharing ministry.
  • People who experienced a health insurance coverage gap of fewer than three months.
  • U.S. citizens who live outside of the country for at least 330 days during a 12-month period. However, once they return to the U.S., they need to purchase health insurance within three months.
People must apply for an exemption to the individual mandate through the IRS. The IRS created a section on its website about the mandate, exemptions to it, and how to file.