What happens if you don’t sign up for Obamacare?
The individual mandate of the Affordable Care Act requires that everyone have health insurance coverage. The coverage must be through a qualified health plan. Those who do not have it must get an exemption or pay a penalty. Comparison shopping will help consumers find the best fit for their individual or family needs. Start comparing health insurance rates now by using our FREE tool above!
Qualified Health Plans
The Affordable Care Act requires health insurance that meets the requirements of minimum essential coverage. These qualified health plans will satisfy the mandate and avoid the shared responsibility penalty. All plans purchased on the Obamacare exchanges qualify, as do grandfathered plans, Medicaid, and CHIPs. Plans purchased outside of Obamacare may also qualify if they meet the essential coverage requirements.
Penalty for Uncovered Months
The shared responsibility penalty applies to each month or part thereof in which an individual or family unit lacks coverage under a qualified health plan. Those who cannot afford coverage can request an exemption for circumstances that qualify as a financial hardship. The monthly penalty is one-twelfth of the annual amount. The state or federal government may grant financial hardship exemptions for up to three months without coverage.
Calculating the Penalty
The law provides two methods for calculating the coverage penalty, the percentage of income or the per person method. The percentage of income method uses 2.5 percent of household income up to a maximum amount that equals the annual premium for a bronze plan. The per-person method charges $695 per year per adult and $347.50 for minors. The maximum is $2,085.
Open Enrollment for calendar year 2016 runs from November 1, 2015, through January 31, 2016. Open Enrollment is the exclusive period for public sign up. Everyone has a right to select plans and sign for health insurance coverage. These dates are the official opening and closing of the sign-up period for the calendar year 2016. Private companies usually follow the federal Open Enrollment because they base plans on the same local conditions and demands for services.
After Open Enrollment
It is generally not possible to sign up after the last day of Open Enrollment. In the past two years, the government has extended the signup period for the limited purpose of helping people who started but failed to complete sign ups.
State or federal exchanges have also made provisions for last minute surges in enrollment and technical difficulties that interfered with successful sign ups.
As a matter of legal rights, the exception to Open Enrollment is the Life Event provision. These are changes in status that require a new enrollment period. The special enrollment period runs for sixty days from the date of the life event.
Life Events and Relief from Penalty
The Life Events exception was written into the Affordable Care Act. It was a concession to the fact that human events happen without regard to calendars and deadlines. The goal of the ACA is to get as much participation in health insurance as possible. One purpose of enrollment deadlines is to offer a fair opportunity for insurers to operate in a sound, sustainable business environment with regard to prices, services, and expected demands.
Life Events and the ACA
The government has some discretion to recognize Life Events with the principle of changes in status that require a new opportunity for coverage. These special enrollment periods run for up to sixty days from the date of a qualifying event.The accepted life event exceptions include the below-listed items.
- Giving birth to a child
- Adopting a child
- Moving to a different state
- Losing coverage as a dependent
- Losing coverage because of losing a job
Exemptions from the Coverage Mandate Penalty
The IRS administers a program for exemptions including hardship cases. The exemptions include the below-listed items.
- Those not required to file income tax returns
- Financial hardships from job loss
- Those with less than three months without coverage
- Coverage that costs more than eight percent of income
- The state did not accept Medicaid expansion to help the needy, sick and vulnerable low-income earners.
Signup Outside of the Marketplace
Shopping outside of Obamacare marketplaces is the only way to see all of the plans available in a particular area. This is particularly applicable to those above or near the 400 percent income threshold. These applicants would get little or no financial benefit from purchasing through the Obamacare system. Many insurers issue qualified health plans not sold through the marketplace. Comparison shopping is an excellent way to find the best price and value among health insurance plans available on and off the Obamacare marketplace. Comparison shopping helps consumers focus on the parts of plans that have particular importance for their individual or family situation. Start comparing health insurance rates now by entering your zip code in our FREE tool below!