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- A major component of ObamaCare is the individual mandate. With some exemptions, people are required to be insured with minimum essential coverage.
- People who are not insured may be faced with a fine.
- People who meet the qualifications for exemption will not have to pay the fine.
One of the goals of ObamaCare is to expand health insurance coverage in the U.S. The law has expanded coverage by increasing the insurance options for many Americans as well as by financially penalizing certain people who are not insured. If you do not want to incur the fine, you should spend some time reviewing your health insurance options. Premiums, co-pays, and deductibles vary considerably under different policies, including those offered through employers, through the Marketplace, and through the private market. Compare health insurance rates now by using our FREE tool above!
If you have an affordable health insurance option but have not signed up for a plan, you’ll be fined. This fine is payable when you file your federal tax returns. In 2016, you’ll pay one of these two fines and you will be required to pay whichever amount is higher:
- 2.5% of your household income above the yearly tax filing threshold. In 2014, this minimum income level was $10,150 for single taxpayers and $$20,300 for married couples filing jointly. Your fee cannot exceed the average cost of the yearly premium of a Bronze plan sold on the Marketplace.
- $695 per uninsured adult in the household and $347.50 per uninsured child under 18 living in the home. If there are multiple children, the government limits the fee to $2,085.
Minimum Health Insurance Required
You need a certain level of health insurance to be excused from getting fined. The majority of health insurance plans available meet the minimum standards.
- All Marketplace plans
- Employment-based health insurance plans
- Retiree plans and COBRA coverage you’ve signed up for with a former employer
- Medicare Part A or Part C
- All Medicaid plans other than those that only offer limited coverage
- CHIP plans for children
- Plans that adult children between the ages of 18 and 26 receive under their parents’ plan
- Most student health plans
- Most veterans’ health plans
- Most TRICARE plans
- Most individual health plans
- Grandfathered plans in place since March 23, 2010 or earlier
It’s important that you carefully review your benefits before signing up for a plan. You can compare different qualifying plans to determine which ones may give you the most benefits in term of cost and medical coverage.
The 10 essential benefits that all qualified health care plans must include are:
- Outpatient care
- ER visits
- Hospital visits
- Childbirth services as well as certain prenatal and postnatal care
- Mental health and substance abuse services
- Prescription drugs
- Rehabilitation from an injury, disability, or chronic condition
- Lab tests
- Certain preventive services, including screenings and vaccines
- Pediatric medical, dental, and vision care
Which Plans are not Sufficient
- Be associated with workers’ compensation
- Cover only a certain condition
- Only offer you discounts on medical care
- Only cover vision or dental services
Changing or Obtaining Insurance
You can sign up a health insurance plan on the Marketplace during the open enrollment period. In 2015 – 2016, this period was November 1, 2015 – January 31. 2016. In the future, this period will likely be October 1 – December 15, though they may be extended. Marketplace plans do vary, so you need to spend time reviewing the coverage benefits before selecting a particular plan. You can apply for Medicaid or CHIP at any time.
You can apply for a private individual insurance plan at any time. Be sure to check to see if it includes the minimum essential coverage so that you can be exempt from the fine. You can shop around for the most ideal coverage given your budget and potential medical needs.
If You Don’t Pay the Fine
If you don’t pay your fine when you’re filing your tax returns, the amount of your fine will be automatically deducted from any future tax refunds for which you qualify. You won’t be charged with any crime nor will you face any liens or levies on your assets.
Certain hardships can qualify you for an exemption. In general, they involve situations which impact one’s finances. They include:
- Being homeless
- Being evicted or facing foreclosure
- Receiving a shut-off notice from a utility company
- Being a victim of domestic violence
- Having a family member die
- Having filed for bankruptcy
- Having experienced a fire, flood, or disaster
- Being faced with debt to due to medical expenses
- Having incurred extra expenses from caring for a family member
- Being ineligible for Medicaid in a state that has not expanded Medicaid coverage
Short-term Gaps in Coverage
You’ll only be fined if you do not have minimum essential coverage for any day in at least three months. There are a number of stipulations, including:
- If your gap in coverage crossed two calendar years: You can apply for an exemption if the third consecutive month in which you were uninsured was part of the next year.
- If you had two separate short-term gaps in a calendar year: You can only claim an exemption once. You’ll be assessed a fine for the second gap in coverage, even if it lasted one or two months.
Your fine will be pro-rated. The annual fine you would have been assessed will be divided by 12 to determine your monthly fine.
Applying for an Exemption
You have to have some sort of documentation that notes your situation, and you have to mail it to the government along with your paper application.
You can usually receive an exemption for one month before and after your hardship in addition to the months in which you experienced the hardship.
If you do qualify for an exemption and correctly fill out your application, you’ll receive a written notice from the Marketplace. You’ll also receive an Exemption Certificate Number (ECN). When you file your taxes, you’ll refer to your ECN when you designate that you’re officially exempt from the fine.
Under ObamaCare, health insurance options have increased. If you do not obtain insurance and have an affordable option available, either on or off the Marketplace, you’ll be faced with a fine. This fine is payable when you file your income taxes. If you don’t pay your fine, the amount will be withheld from any future tax returns that you receive. If you want to make sure that you’re not penalized, you can compare different plans that meet the minimum essential coverage requirements. Enter your zip code in our FREE tool below to get instant health insurance quotes!