Individual Responsibility

 

The ACA requires that individuals who can afford to do so maintain a minimum level of health insurance coverage or else pay a tax penalty. Individuals are responsible for having coverage that includes the “minimum essential benefits” beginning in 2014.  There are limited exceptions.  

Why is it in the law?

The goal of the ACA is to increase the number of people who are insured and it uses many means to get there.  The main purpose of the requirement is to encourage people to accept coverage they are eligible for or to purchase coverage.  Covering everyone helps bring the costs of health care down. It is also important because insurers will be required to offer coverage to everyone who applies regardless of their health status or pre-existing conditions.  If people were not encouraged to purchase coverage the concern is that they would wait until they get sick and have a need for coverage and that would drive up costs.  

Are children required to be covered? 

Yes, parents or caretakers must secure coverage for their children.

Is everyone subject to a penalty for not securing coverage?

No, a number of people are exempt including:
- People who earn so little they are not required to file tax returns (This is adjusted annually but in the 2009 tax year  it was $9,350 for an individuals and $18,700 for a family)
- No access to affordable coverage
- A short coverage gap (less than three months)
- American Indian tribes
- other hardship exemptions designated by the HHS Secretary

Are there monetary incentives?

Tax credits available for individuals from 133% to 400% of the federal poverty level to offset cost of coverage.

What is acceptable coverage?

- Government sponsored health plan (Medicare, Medicaid, Children’s Health Insurance Program (CHIP) or TRICARE)
- Employer based coverage
- Individual coverage (including the health insurance exchanges)

What is the penalty?

The penalties are administered by the IRS and change by year.  Tax penalties for no coverage are the larger of:
- 2014: $95 per adult plus $47.50 per child under age 18 up to a maximum of $285 or 1% of income
- 2015: $325 per adult plus $162.50 per child up to a maximum of $975 or 2% of income
- 2016:  $695 per adult plus $347.50 per child up to a maximum of $2085 or 2.5% of income 

When does it take effect?

The individual responsibility provisions take effect in 2014.

What help is available for moderate income people?

There are premium subsidies for low and moderate income individuals.  Premiums are the amount of money that you must pay for a health insurance plan.  It is usually paid monthly, quarterly, or yearly by you or your employer.  It does not include co-pays, deductibles or other out of pocket costs.

Subsidy amounts are presented for a family of four in the table below:  

Income as
a percent of poverty

Annual income for
a family of four

Premium contribution as
a percent of income

Monthly dollar amount for
a family of four

133%

$29,326

3%

$73

150%

$33,075

4%

$110

200%

$44,100

6.3%

$232

250%

$55,125

8.05%

$372

300%

$66,150

9.5%

$524

350%

$77,175

9.5%

$610

400%

$88,200

9.5%

$608

     

Who is eligible for the subsidies?

Premium subsidies will be available for individuals and families with incomes between 133 percent and 400 percent of poverty ($14,404 to $43,320 for individuals and $29,326 to$88,200 for a family of four.).

How will the subsidies work?

These payments will be made directly to insurance carriers on behalf of eligible individuals and families.  There are only available to people purchasing coverage in the health insurance exchanges. The subsidies will be on a sliding scale.  For example a family with income at 133% of poverty ($29, 326) would have the amount of premiums they are responsible for capped at 3% of their income or $879 a year ($73 each month).

Is there any assistance with out of pocket costs?

Generally people with incomes below 400% of poverty will have limits on how much out of pocket expense they will have.  Like the premium subsidy is a sliding scale, offering more assistance to lower income individuals.