ACA REQUIREMENT TO HAVE BASIC HEALTH CARE COVERAGE (INDIVIDUAL MANDATE)
Q 50: What is the individual mandate, and does that mean consumers must buy coverage through Maine’s Health Insurance Marketplace?
Starting Jan. 1, 2014, consumers and their dependents are required to have “minimum essential coverage” or pay a penalty, unless they fit within an exemption (see below). This requirement is commonly called the “individual mandate.”
Consumers may buy a plan through Maine’s Health Insurance Marketplace to satisfy the individual mandate, but they don’t have to. Individual coverage will also continue to be available outside the Marketplace, through agents and brokers or directly from the insurer. Other forms of health coverage that satisfy the requirement include most employer-sponsored plans, union plans, and enrollment in a government program such as Medicare, Medicaid, TRICARE or CHIP.
Examples of health plans that do not meet the requirement of minimum essential coverage and do not satisfy the individual mandate requirement to have basic health care coverage are insurance coverage and discount plans that include only specialty or ancillary services (for example, hearing, chiropractic, etc.).
Q 51: What happens if a consumer doesn’t satisfy the individual mandate?
Those who don’t have health insurance coverage and don’t fit within an exemption will pay a tax penalty beginning in 2014. The penalty will increase each year:
- In 2014, it will be the greater of $95 per adult or 1% of taxable income above the filing limit.
- In 2015, it will be the greater of $325 per adult or 2% of taxable income above the filing limit.
- In 2016, it will be the greater of $695 per adult or 2.5% of taxable income above the filing limit.
- After 2016, the minimum tax penalty increases annually based on a cost-of-living adjustment.
Each month, the penalty due is 1/12 of the total annual penalty. However, there is no penalty if there is only one gap in coverage during the year and that gap (including any consecutive time without coverage in the prior or following year) does not last for three full months.
The penalty for a child is half that of an adult. The total liability for a family is capped at 300% of the individual penalty. Only the first two children are counted to calculate the penalty. A maximum penalty will be calculated based on premiums for plans offered through Maine’s Health Insurance Marketplace.
Q 52: What are the exemptions to the individual mandate?
The following people aren’t required to pay a penalty if they don’t have health insurance coverage:
1) Individuals and families whose income is low enough that they don’t need to file federal income tax returns.
2) People who would pay 8% or more of their income for coverage, after taking premium tax credits and employer contributions into account.
3) People who have been uninsured for less than three months.
4) People who are incarcerated.
5) People who are not lawfully present in the country.
6) Members of federally recognized American Indian tribes and people who can get services through an Indian health care provider.
7) Members of certain religious groups that object to insurance coverage.
8) Members of health care sharing ministries.
9) People who experience hardship in obtaining coverage.
The Kaiser Family Foundation has put together a flowchart to help consumers understand who must have health insurance: http://healthreform.kff.org/en/the-basics/requirement-to-buy-coverage-flowchart.aspx. There’s more information about who doesn’t have to pay a penalty if they don’t have health insurance in the IRS FAQ at: www.irs.gov/uac/Questions-and- Answers-on-the-Individual-Shared-Responsibility-Provision.
Q 53: What if a consumer already has health insurance coverage?
Generally, if consumers already have health coverage through an individual policy, an employer or union plan, or a government program such as Medicare or MaineCare, they will not have to do anything besides keep their existing coverage in order to satisfy the individual mandate. When an insurance plan is required to change its benefits in order to remain in compliance with the ACA, the insurer will be making those changes when it renews the policy.
However, certain types of policies, such as specified-disease policies and accident-only policies, do not qualify as “Minimum Essential Coverage.” If an insurance company or an employer sends a consumer a notice that his or her health plan doesn’t qualify as “Minimum Essential Coverage,” then the consumer may have to pay a tax penalty for not having adequate health insurance coverage. To avoid this, contact Maine’s Health Insurance Marketplace at www.healthcare.gov or 1-800-318-2596, or contact an agent or broker. If you have questions about whether your coverage qualifies as “Minimum Essential Coverage,” contact your insurer or contact the Maine Bureau of Insurance at 1-800-3000-5000.