Introduction
What Is the Individual Mandate for Health Care Reform? It’s the Affordable Care Act (ACA), commonly referred to as Obamacare, which has significantly transformed healthcare accessibility and affordability in the United States. One of its crucial elements is the individual mandate, mandating that most individuals obtain health insurance or incur a tax penalty (until 2018).
But how does it function in practice, and what steps must you take to secure coverage? If you’re looking to obtain health insurance under the individual mandate, read on!
SUMMARY
1. Understand the Individual Mandate
2. Determine if You Qualify For an Exemption
3. Check Your Eligibility For Medicaid or Chip
4. Get Coverage Through Your Employer (If Offered)
5. Explore Plans on The Health Insurance Marketplace
6. Understand Marketplace Plan Options and Costs
7. See if You Qualify For Subsidies
Recap
1. Understand the Individual Mandate
To understand the individual mandate and its purpose, consider that under the Affordable Care Act (ACA), most U.S. citizens and legal residents are required to maintain a minimum level of health insurance coverage.
Before 2019, individuals who could afford health insurance but chose not to obtain it faced a tax penalty. This penalty, imposed on annual tax returns, could be either a flat dollar amount or a percentage of their income, whichever was higher.
However, starting with the 2019 plan year, the federal tax penalty for not having health coverage was reduced to $0 following changes made by the Tax Cuts and Jobs Act passed in December 2017. While the individual mandate technically still exists at the federal level, there is no longer a penalty for non-compliance. Nevertheless, several states have introduced their own mandates and penalties including Massachusetts, New Jersey, The District of Columbia, Rhode Island and California as well.
Additionally, individuals who had health coverage during the previous calendar year receive forms 1095-A, B, or C to assist in completing their tax returns. If you received premium tax credits, you must file Form 8962 with your federal tax return annually to reconcile the credits you received with your actual eligibility based on income. These forms detail coverage through the Health Insurance Marketplace, other health coverage not reported on the Marketplace forms, or employer-provided health insurance for larger employers.
2. Determine if You Qualify For an Exemption
To determine if you qualify for an exemption from the individual mandate, consider the following criteria:
- You have a religious objection to having health insurance.
- You are incarcerated or an undocumented immigrant or a member of a federally-recognized Native American tribe.
- Your household income is below the tax filing threshold ($12,950 for an individual in 2024).
- The lowest-cost coverage available to you, after subsidies, would require you to pay more than 8.09% of your income.
Additionally, there are hardship exemptions available for circumstances like homelessness, foreclosure, domestic violence, or medical expenses resulting in substantial debt.
3. Check Your Eligibility for Medicaid or Chip
To determine if you qualify for Medicaid or CHIP, assess your eligibility based on your income and household size. Medicaid offers health coverage to low-income adults, children, pregnant women, elderly adults, and individuals with disabilities. Meanwhile, CHIP provides coverage to children in families whose income exceeds Medicaid thresholds.
Under the ACA, states can choose to expand Medicaid eligibility to cover all adults under 65 with incomes up to 138% of the federal poverty level ($18,754 for an individual or $38,295 for a family of four in 2024). However, as of April 2024, 10 states have opted not to expand Medicaid: Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming.
To check your eligibility, visit your state’s Medicaid agency website or complete an application on the Health Insurance Marketplace.
4. Get Coverage Through Your Employer (If Offered)
To obtain coverage through your employer, if available, is often your most viable option for affordable health insurance. According to the ACA’s employer mandate, companies with 50 or more full-time equivalent employees are required to offer affordable health insurance to full-time workers and their dependents or face penalties.
Coverage provided by your employer is deemed affordable if your required contribution for self-only coverage does not exceed 9.12% of your household income (as of 2024). If you’re eligible for affordable coverage through your job, you may not qualify for subsidies on a Marketplace plan.
During your hiring process or your employer’s annual Open Enrollment period, you’ll have the opportunity to enroll in their health plan. Your employer is obligated to furnish you with a Summary of Benefits and Coverage (SBC).
5. Explore Plans on The Health Insurance Marketplace
To explore plans on the Health Insurance Marketplace, if you’re without coverage from a job, Medicaid, Medicare, or another source, obtaining an individual health plan through the ACA’s Health Insurance Marketplace (also known as the exchange) is a beneficial option.
To shop for and enroll in a Marketplace plan, you need to meet certain criteria:
- Reside in the United States
- Be a U.S. citizen or national, or have lawful presence
- Do not be currently incarcerated.
If eligible, you can enroll via HealthCare.gov or your state’s designated Marketplace website.
For the 2024 coverage year, the annual Open Enrollment Period (OEP) was scheduled from November 1, 2023, to January 15, 2024, in most states. However, some states extended their deadlines.
Once the Open Enrollment Period ends, you can only enroll in or change a Marketplace plan if you qualify for a Special Enrollment Period (SEP). These periods are triggered by significant life events such as losing other coverage, moving to a new state, getting married, having a baby, or adopting a child. SEP eligibility typically lasts for 60 days from the qualifying event.
6. Understand Marketplace Plan Options and Costs
To understand Marketplace plan options and costs for your individual mandate, you’ll encounter plans organized into four “metal” categories:
Bronze
These plans feature the lowest monthly premiums but have higher costs when you require medical care. On average, they cover 60% of costs, leaving you responsible for 40%.
Silver
With moderate premiums and out-of-pocket expenses, these plans typically cover 70% of costs (with you paying 30%). Lower-income enrollees may qualify for cost-sharing reductions.
Gold
These plans have higher premiums but lower out-of-pocket costs when you need medical care. They cover about 80% of costs, leaving you with a 20% share.
Platinum
Featuring the highest premiums, platinum plans offer the lowest out-of-pocket costs for medical care, covering around 90% of costs (leaving you responsible for 10%).
Marketplace plans also offer different provider network types like Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Point of Service (POS) and Exclusive Provider Organization (EPO).
When selecting a plan, consider factors like the monthly premium, annual deductible, copayments/coinsurance, out-of-pocket maximum, provider network, drug formulary, and additional benefits. Assess your anticipated healthcare needs, preferred providers, and budget to determine the plan that best suits your requirements and provides the most value.
To enroll in your selected plan and initiate your coverage, begin by comparing available options and confirming your eligibility for subsidies. Navigate to HealthCare.gov or your state’s Marketplace website, where you can choose the plan that best suits your needs and proceed with enrollment.
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7. See if You Qualify For Subsidies
To determine if you qualify for subsidies on your individual mandate, which can reduce marketplace costs, consider two primary forms of financial assistance provided under the ACA:
Premium Tax Credits (PTCs)
These subsidies lower your monthly premium expenses. They are available to individuals whose household income falls between 100% and 400% of the Federal Poverty Level ($13,590 to $54,360 for an individual in 2024).
Cost-Sharing Reductions (CSRs)
These discounts are applied to deductibles, copayments, and coinsurance, specifically for silver plans. They are accessible to enrollees with incomes ranging from 100% to 250% of the Federal Poverty Level ($13,590 to $33,975 for an individual in 2024).
Your eligibility for these subsidies depends on factors such as your income, household size, age, and whether you have other health coverage options. When you complete a Marketplace application, you provide this information to determine if you qualify for PTCs, CSRs, or Medicaid/CHIP.
Recent changes under the Inflation Reduction Act have made subsidies more generous for 2024 coverage. Your PTC amount is calculated based on your estimated income for the coverage year.
Recap
Obtaining health insurance under the ACA individual mandate involves understanding your coverage options, rights, and responsibilities. While there is no longer a federal tax penalty for lacking coverage, having health insurance protects your health and financial wellbeing.
Depending on your circumstances, you may be eligible for Medicaid, employer-sponsored insurance, or subsidized individual Marketplace plans. Exploring these options and choosing a plan that fits your needs and budget is key.
Once you have coverage, stay on top of premium payments, report income and household changes to the Marketplace, and file your taxes accurately.
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