The individual mandate in the Affordable Care Act states that if you don’t have health insurance that qualifies as minimum essential coverage, you will have to pay a fine. Many people are concerned about the possibility of this fee, so HealthMarkets Insurance Agency takes this opportunity to review the most common questions we hear about the individual mandate.
What qualifies as ‘minimum essential coverage’?
The vast majority of health insurance plans qualify as minimum essential coverage. All Marketplace plans or health insurance plans you get through your employer qualify. Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) also provide minimum essential coverage. TRICARE, veterans health care programs, Peace Corps Volunteer plans, and retiree health plans offer minimum essential coverage, as well as self-funded coverage offered to students by universities for years that began on or before December 31, 2014.
What doesn’t qualify as minimum essential coverage? Worker’s compensation does not count, and neither does insurance that only covers a specific disease or condition. If you just have vision and/or dental care, you may have to pay a fine. Plans that offer only discounts on medical services are not considered ‘minimum essential coverage’ either.
How much will I have to pay?
That depends. You’ll either have to pay a percentage of your household income or a flat fee, whichever is higher. If you didn’t have coverage in 2016, you’ll pay either 2.5% of your yearly household income, or $695 per adult and $347.50 per child. Using the first method (2.5% of your yearly household income), the maximum you’ll have to pay for 2016 is $2,699, which is the average premium for a bronze plan in the Marketplace. Using the second method (flat fee), the maximum you’ll have to pay is $2,085. Remember, you don’t get to choose the method to calculate the fee for not having health coverage; it is whichever method is higher. And, the fee goes up steeply every year.
What if I can’t or don’t pay the fee?
The fee is paid automatically on the federal income tax return you file for the year you don’t have coverage. You may be preparing to file your 2016 taxes now. If you didn’t have health insurance coverage last year, your fine will be taken out of this tax return. If you don’t have health insurance this year, the fee will be taken out of your 2017 taxes, which are usually filed in 2018.
If your tax refund doesn’t cover the fee, the IRS will hold back the fee amount from any future tax refunds.
If you couldn’t get insurance because it was unaffordable based on your income, you may qualify for an exemption from the fee. There are several reasons you may qualify for an exemption from the penalty, including:
- You were uninsured for less than 3 months of the year, and the rest of the time you were covered.
- Your income is low enough that you don’t need to file a tax return.
- You’re a member of a federally recognized tribe (or eligible for services through an Indian Health Services provider), a recognized health care sharing ministry, or a recognized religious sect with religious objections to insurance.
- You are not lawfully present in the U.S.
- The lowest-priced coverage for you would cost more than 8% of your annual household income.
- You have a hardship exemption.
You can complete an application in the Health Insurance Marketplace to find out if you are eligible for an income-based exemption.
What are my next steps?
Call a HealthMarkets agent. We’ll make sure you have the minimum essential coverage, so you don’t have to pay a fine. We can also help you determine if you qualify for an exemption from the individual mandate. If you’re worried that health insurance is impossible to afford, we’re here to help. Your local licensed insurance agent will scour thousands of plans nationwide to find the best coverage at a price that works for your budget. In fact, we guarantee the lowest price on all of the plans we offer. And we’ll help you figure it out at no cost to you. Don’t get stuck paying an unnecessary fine. Plan ahead with HealthMarkets.
Your State Department of Insurance regulates the insurance products that we offer in your state and corresponding premium rates. The premiums charged by a carrier for a particular insurance product must be consistent; regardless of whether you buy it from HealthMarkets Insurance Agency, from a competing agency or directly from an insurance carrier. Our Best Price Guarantee means that you have access to the variety of products and services that we offer, with the peace of mind that you won’t find a lower price anywhere for an insurance product that we offer. That’s why HealthMarkets Insurance Agency is the smarter way to shop for insurance.