Though the Affordable Care Act has received enormous attention, many people might still be confused about exactly what the legislation requires of individuals. According to a helpful article by the Kaiser Family Foundation, the Affordable Care Act requires that many people be insured or face a penalty. The following discussion will explore how the individual mandate works.
What is the individual mandate?
The individual mandate is a provision ofthe Affordable Care Act that requires every individual to have health insurance in 2014 or else pay a penalty. This coverage can be supplied through your job, through public welfare programs like Medicare or Medicaid, or through anindividual policy.
Who is impacted by the individual mandate?
The mandate is specifically aimed at nearly 60 million people younger than 65 who do not currently have insurance. Government estimates say that three out of five Americans will have coverage through their employers while another 12 percent will be covered through a federal or state government insurance program. These groups are not affected by the mandate.
Exceptions to the individual mandate
The Affordable Care Act includes several exemptions. One primary exempt group includes those who cannot afford coverage due to high premium costs or a low household income. Native Americans, prisoners, illegal immigrants and those with certain religious objections are also exempt from the individual mandate.
When do you have to report insurance coverage?
The current law states that individual coverage or exemptions will not need to be reported until you file your 2014income tax return, which will not be due until April 15, 2015.
What happens if you don’t get coverage?
Those who are not exempt from the penalty and who still choose not to get covered they will face apenalty imposed by the IRS at the end of the tax year. The penalty for the first year of noncompliance is $95 per adult and $47.50 per child, or 1 percent of your family’s income, whichever is greater. Though this may not seem like much of a fine, it’s important to note that the fines will increase over time and eventually grow to $695 per adult or 2.5 percent of family income, whichever is greater.