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For our final Sense of Community report on the Affordable Care Act, we’re looking at the penalty fee, or fine, for not having health insurance in 2014. The fee is officially called “The Individual Shared Responsibility Payment,” but it’s often referred to as the “individual mandate,” and it’s one of the most controversial parts of the new health law.
The Missouri Foundation for Health is a non-partisan philanthropic foundation that tries to improve the health of Missourians. One of its health policy advisors, Ryan Barker, has been traveling the state telling people about their rights and responsibilities under the new Affordable Care Act, or Obamacare.
“It’s really important for people to know there is this new requirement that starts in 2014 that says most Americans have to have a qualifying health insurance plan…and if they don’t, they have to pay a fee,” Barker said.
In the past few months, Barker says one question he’s been asked a lot is, “What counts as health insurance?”
“If someone currently has Medicare, Medicaid, Tricare (which is military insurance), or if they get insurance through their employer, you’re set. You’re good –you aren’t going to have to worry about getting a fee, and you don’t have to do anything. The fee really applies to those who do not have insurance, and are choosing [not to get it] or can’t find insurance,” Barker said.
And then there are some people who are exempt from paying the penalty:
“That population that would have been eligible for Medicaid if our state had chosen to do that, [those who are] under the poverty level—there is no fine or penalty for them. So, if you’re under 100% of poverty, and the state chooses not to expand Medicaid, you’re not going to get hit with that double-whammy of not having affordable insurance options, and having to pay a fine. The [Obama] administration has come out and said [that] those individuals will not face a penalty for not having health insurance,” Barker said.
Another exemption, he said, is people for whom “affordable” health insurance is not an option where they live; that definition of “affordable,” is health insurance that costs less than eight percent of your family’s income, Barker said. Those individuals can also get a waiver from the fee, he said.
Others who may be exempt, according to the official website www.HealthCare.gov, are:
• Members of certain religious sects who object to insurance, including Social Security and Medicare
• People uninsured for less than three months of the year
• Those who don’t file tax returns because their incomes are too low
• Members of recognized health care sharing ministries
Also, there are several categories of “hardship” that may qualify for an exemption, like being homeless, being evicted, having medical expenses you couldn’t pay, suffering domestic violence, filing for bankruptcy, the death of a close family member, or natural disaster.
But for the rest of the population, there’s that fee--if you don't have health insurance.
“And when it starts out in 2014, the fee or penalty is rather low. It is $95 per adult in the household, and $47.50 per child, or one percent of your family’s income—whichever is greater. So, for the first year, it definitely will be less expensive for people to pay the fee than to buy insurance, in most cases—however, you still won’t have insurance if you choose to pay the penalty,” Barker said.
You make the payment when you file your 2014 taxes, which are due in April 2015.
And the penalty goes up over time. In 2015, it’s about $325 per adult, $162 per child, or two percent of the family’s income. And in 2016, it jumps all the way to about $700 per adult and $350 per child, or 2.5 percent of a family’s income—whichever is higher. After 2016, the penalty fee is adjusted for inflation, so it will continue to increase.
The penalty fee for not having health insurance will be administered by the Internal Revenue Service. But how will the IRS know—or track—who has health insurance and who doesn’t?
Health insurance through the government—like Medicare and Medicaid—is already tracked, and insurance through employers will be indicated on new W-2 forms that workers send in with their taxes. Again, Ryan Barker.
“[For] other folks who have either a policy that they’re buying on their own, or through the marketplace, there will be a new, one-page tax form where you will have to fill it out and prove that you have health insurance. So it is the IRS that is in charge of enforcing the individual mandate and collecting the fines. If you owe a fine, they can take it out of your rebate, if you’re owed a rebate on your taxes. If you aren’t owed a rebate, then they will send you a bill for that fine, or penalty,” Barker said.
And according to www.HealthCare.gov, the deadline for enrolling in a new marketplace insurance plan without paying the penalty is March 31, 2014. However, some experts say it may take several weeks to process insurance applications…so to be safe, they advise purchasing insurance before mid-February if you want to avoid the fine.
For KSMU’s Sense of Community Series, I’m Jennifer Davidson.