The Affordable Care Act individual mandate is scheduled to be implemented in 2014. The administration will ask individuals and families to share in the responsibility to carry minimum health insurance requirementsor pay a penalty. Applicable individuals will be assessed penalties as taxpayers and no longer be able to choose not to carry minimum health insurance requirements without repercussions. The premise of the act is to eliminate cost of healthcare that is unable to be recouped by providers driving up the cost of care. One of the leading causes of bankruptcy is medical debt. Individuals without insurance simply can’t pay medical bills and those costs are not received by the providers driving the cost of healthcare up. The premise of the act is if individuals and families are incentivized to carry minimum health insurance requirements, much less will be written off by providers allowing them to operate profitably and ultimately decrease the cost of care. That is why the mandate is officially called shared individual responsibility. Although the Secretary of Health and Human Services has yet to define the specifics of an essential health insurance package, we do know how the penalties will be assessed.
If applicable individuals fail to maintain essential health insurance coverage, they will be required to pay an annual tax penalty or shared responsibility. Taxpayers will have to report their coverage with their tax returns. Applicable individuals who do not carry essential coverage will pay $95.00 for each household member up to three, or 1% of household income in 2014. The affordable Care Act individual mandate will go up to $325.00 or 2% of household income in 2015 and $695.00 or 2.5% of household income in the years following. The individual shared responsibility will be prorated for each month in which a qualified individual fails to maintain minimum essential health insurance coverage. There are currently, and will be added tax credits to assist individuals and families in acquiring coverage.
There are exemptions from the Affordable Care Act individual mandate. Applicable individuals will be exempt for the following reasons: The individual has a religious objection to purchasing health insurance. The cost of the individual’s premium contribution for employer sponsored coverage or for the lowest-cost bronze level coverage available in an affordable insurance exchange exceeds the qualifying percentage of household income. The qualifying percentage threshold will be indexed to the amount average premium growth exceeds wage growth. The applicable individual’s household income is below the federal income tax filing threshold. The individual is a member of a recognized Indian tribe. The break in coverage is less than three months. The Secretary of Health and Human Services determines the individual has suffered a hardship preventing them from obtaining coverage. The individual resides outside the United States. Individuals will not incur criminal penalties for not paying the penalty and will not be subject to liens or levies by the Secretary of Treasury to collect the penalty.
The secretary of Health and Human Services has yet to define the specific components of the essential health insurance coverage need to avoid the penalties of the Affordable Care Act individual mandate. States are determining their course of action to provide a market place for individuals to purchase individual health insurance packages through affordable insurance exchanges. With so much information yet to be determined, we’ll all have to wait and see what we are going to be mandated to carry for coverage, what resources we’ll have to purchase coverage, and how the administration will help make it affordable. Only once implemented will we understand the true impact on overall healthcare costs. I do know from experience that even with healthcare coverage, individuals and families may still incur an incredible amount of health insurance bills. Many things need to happen to create an environment where we can reduce overall healthcare costs. Without a strong employment landscape, even covered individuals will struggle to pay medical expenses.