In January 1, 2014, the Affordable Care Act (ACA) or “Obamacare” will go into effect. The ACA requires significant changes to guaranteed issue laws. As a result of Obamacare, individual and group health plans must guarantee issue policies to all applicants, regardless of health status or other factors. Penalties exist if you do not have insurance in place.
PPACA requires most adults not covered by an employer or government-sponsored insurance plan to maintain health insurance coverage or pay a penalty, a provision commonly referred to as the individual mandate.
Although bitterly contested, the Supreme Court on June 28th, 2012 upheld the individual insurance mandate. Although President Obama had said the ACA was not a tax, The Supreme Court, which has the final say, says it is a tax and the law will go into effect.
A historic overhaul of the health insurance system in the US is underway and many are wondering what happens if you don’t currently have health insurance.
Currently, insurance companies can still deny coverage until January 1, 2014 due to pre-existing conditions. After this date, they will no longer be able to deny you coverage and premiums will be limited by law. If you have been turned down for health insurance in the meantime and don’t qualify for medicaid, then you may be eligible for coverage through a temporary high risk pool (PCIP) These PCIP’s are also a new requirement of the law.
What happens is you don’t have insurance:
(Per Time magazine)
Penalties that apply: (per Time Magazine)
(Anecdotal story from Picayune Times on how not having health care could affect someone. ) Weave into story… do not take verbatim or reference in article.)
As an employer, my company offers Blue Cross medical coverage to all employees. It is a benefit and helps attract good employees. My company doesn’t have to offer any insurance at all. Under Obamacare, my company will be fined $2,000 per employee if I don’t offer a company plan.
The average Blue Cross cost per employee for my company is around $4,000 a year, so the fine is less than the cost of the insurance. But remember, even with no penalty whatsoever my company has been offering health care. So if I was offering health care when there was no penalty, I sure am going to be offering health care if there is a $2,000 per employee penalty.
Again, the reason for this is health insurance is vitally important to employees. Many employees won’t even consider working for a company that doesn’t offer health insurance.
So under Obamacare, employers have even more incentive to offer company plans.
The question is whether employees will care as much given the new rules which allow anyone to sign up for the government plan at the last minute, even if they are suddenly diagnosed with cancer.
Remember now that about a third of the lower income earning families may be eligible for Medicaid, which is virtually free. So we are only talking about working families for whom health insurance is a real struggle to afford.
Under the old rules, these families were taking a big risk going without health insurance. If they got cancer, they could not get coverage at the last minute because insurance could exclude you based on “pre-existing conditions.”
Under Obamacare, a family can go uninsured and pay their medical expenses out of pocket. If someone gets seriously ill, the family can sign up at the last minute for health insurance, no questions asked. Pre-existing illnesses cannot be used to deny coverage to anyone.
Going without health insurance will mean a fine: For individuals, the penalty would start at $95 a year, or up to one percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. For families the penalty would be $2,085 or 2.5 percent of household income, whichever is greater by 2016 and beyond.
So a family making $75,000 a year will pay a fine of $750 in 2012 for not having health insurance. That fine will be $1,875 by 2016. There will probably be quite a few families who decide to pay their medical costs out-of-pocket and only sign up for Obamacare if there is a major illness. In a way, this is introducing more free market efficiency because when families pay out of their own pockets, they shop around better for the best price.
How it affects different groups:
(From own website best-insurance-deals.net, so please rewrite so not exactly the same)
Essentially what the law states is that you either show that you have the minimum coverage from a qualified plan or you pay an annual tax penalty. New IRC code § 5000A states the penalty as equal to or greater of the following:
1. 2.5% of the amount by which the taxpayer’s household income for the tax year exceeds the threshold amount of income required for income tax return filing under section 6012(a) OR
2. $695 per uninsured adult in the household.
This penalty will be phased in from 2014 through 2016. In 2014, the penalty will only be 1% or $95 per uninsured adult. In 2015, it will be 2% or $325 per uninsured adult. In 2016, it will be the full penalty. If you are low income and can show hardship, then you may be exempt per IRS rules.
One very interesting part of the new IRC code § 5000A is that the act specifies that liens and seizures are not authorized to enforce this penalty and non compliance will not be subject to criminal penalties. The IRS can’t enforce the non-payment of this penalty as the law is currently written. It will apparently be considered a subordinated tax. It may be subject to civil penalties or enforcement similar to unsecured debt
So if you don’t have insurance now, you may need to consider the state insurance exchanges that are in place or will be put in place. Or, many currently use major private health insurers. This site links you to two that offer choices, which compare rates from dozens of health insurers such as Aetna, Humana, BCBS, Anthem, United Health and many more. They also include quotes from independent insurance agents as well. They are Insureme.com and eHealthInsurance.
Exemptions
You’ve heard that Obamacare has a requirement that every American, as a condition of being alive, purchase health insurance. The mandate has so many loopholes and exemptions.
(Per the Kaiser report… I will put a link in to this report)
Families would be exempt from the mandate at the lowest income levels because they are below the filing threshold for federal income taxes. Just above this level, the mandate would apply, but families would be eligible for substantial government assistance, either through Medicaid (paying essentially nothing for coverage) or through large premium subsidies in exchanges.
Some families eligible for premium subsidies would have to pay more than 8% of income to enroll in a silver plan in an exchange even after receiving subsidies. However, they could likely apply those subsidies instead to a lower cost bronze plan and end up paying less than 8% of income, so would therefore still be subject to the mandate. If this family’s income rises above about $98,000 (estimated to be four times the poverty level in 2016, at which point they are no longer eligible for premium subsidies) they would likely have to pay more than 8% of income for a bronze insurance plan and would therefore be exempt from the mandate. Indeed, for our hypothetical family, the exemption would apply up to about $150,000 in income, at which point the family’s resources would be high enough so that the cost of a bronze insurance policy in an average cost region drops below 8% of income.
Specific dollar amounts would vary based on age, family size, and the cost of health insurance in an area, but the basic story is similar.
http://healthreform.kff.org/notes-on-health-insurance-and-reform/2012/march/the-individual-mandate-how-sweeping.aspx
(Insureme.com also offers additional insights on exemptions. Must re-write some although we are an affiliate of this company.)
Who’s exempt from the 2014 health insurance mandate?
Amy Higgins
The federal health care reform law signed by President Obama in March 2010 will require most U.S. citizens and legal residents to have health insurance starting in 2014. These people will be required to purchase insurance or pay a flat-fee tax penalty or a percentage of taxable income, whichever is greater, according to the Kaiser Family Foundation.
The tax penalty works out to $95 in 2014, $325 in 2015 and $695 in 2016. The taxable income figures are 1 percent in 2014, 2 percent in 2015 and 2.5 percent in 2016.
While the majority of U.S. citizens and legal residents will be subject to these penalties, there are certain groups that will be exempt.
* Members of certain faiths: Practitioners of certain religions will be free from tax penalties. Under this exception, you must certify you are a member of a recognized religious sect. Who is exempt and what proof is needed are described in Internal Revenue Code Section 1402(g)(1).
For example, an exempt people must adhere to the established teachings of a sect that has been in continuous existence since 1950. Such people must be “conscientiously opposed” to accepting benefits from any private or public insurance that makes payments in the event of death, disability, old age or retirement, or that makes payments toward the cost of medical care. This includes Social Security.
For instance, Amish people who are exempt from paying Social Security and Medicare taxes (and therefore do not accept any of their benefits) may be exempt from the health care mandate and tax penalties.
* Health care sharing ministries: Nonprofit health care sharing ministries are organizations with members who share religious beliefs and agree to live certain lifestyles. Members pay shares toward their ministry, much like a conventional insurance premium, in exchange for health care when they need it. Medi-Share, a health care sharing ministry from the Christian Care Ministry, for example, matches members’ contributions with other members’ eligible medical bills on a monthly basis.
To be exempt from tax penalties, people must certify that they are members of a recognized religious sect that shares a “common set of ethical or religious beliefs” and shares medical expenses among members according to those beliefs, regardless of where they live or work.
These ministries must have been in existence continuously since at least Dec. 31, 1999, with uninterrupted medical expense sharing among members since then. These ministries must maintain a person’s membership even after developing medical condition, and must conduct annual audits performed by an independent CPA firm and make those records available to the public.
* Income restraints: Tax penalty exemptions will be granted people for whom the lowest-cost plan option exceeds 8 percent of income and for those with incomes below the tax filing threshold, according to the Kaiser Family Foundation.
* Hardships: Those suffering hardships may be exempt from the tax penalties of the health care law. If the U.S. Department of Health and Human Services determines someone has suffered a hardship that prevents them from obtaining qualified health insurance coverage, he or she may be exempt.
Also exempt from tax penalties are Native Americans, those who haven’t had coverage for up to 90 days, undocumented immigrants and imprisoned people, according to the Kaiser Family Foundation.
Controversy Expected to Continue
Given there is an election year, plenty of controversy over this bill is expected to continue. Regardless of the political landscape, if you are faced with a health care crisis today, the personal and financial implications can be enormous. If you want to compare rates and quotes, then we recommend InsureMe where you can compare rates from dozens of health insurers such as Aetna, Humana, BCBS, Anthem, United Health and many more. They also include quotes from independent insurance agents as well. eHealthInsurance is another great source of plan comparisons. For more detail on the law or other insurance choices, you may wish to visit the US government website called Healthcare.gov.
