Is Obamacare mandatory? If the phrase “individual mandate” is any indication, then the simplest answer is yes. After all, the changes in the health laws were pushed and passed because of the goal of having all Americans insured in terms of health care. But there are loopholes to the mandate, some of which are perfectly legal, while others come with penalties. The Affordable Care Act, however, is only mandatory for those Americans currently uninsured. Even then, there would still be millions of people who will remain uninsured even with the law in place.
What Makes Obamacare Mandatory?
The law requires everyone to have minimum essential coverage and stay covered throughout the period specified in the type of Health Plan that they have. Otherwise, they will be subjected to the Obamacare fee.
Minimum Essential Coverage
What counts as a minimum essential coverage? It is based on the source instead of the rules or benefits specific to it. Some of the health insurance that are considered minimum coverage are employee-sponsored coverage, TRICARE, Children’s Health Insurance Program (CHIP) coverage, most Medicaid coverage, qualified health plan offered through the Affordable Insurance Exchange or purchased from the Individual Market, and self-funded health coverage that universities offer to students, among others. For as long as you have a health plan considered as a minimum essential coverage throughout the year, then you will be spared from the Obamacare fee.
Under the new health law, assessment for individual shared responsibility payment has to be done regularly to help determine individuals who are non-participating or those who remain uninsured. In the event that you are not covered by a health plan that falls under minimum essential coverage, you will have to pay tax penalties. How much fine you will incur vary for every tax season, but the amount will continue to rise every year.
2014 Tax Season
- 1% of household income or $95 per uninsured adult, whichever is higher.
- $47.50 per uninsured child.
2015 Tax Season
- 2% of household income or $325 per adult, whichever is higher.
- $162.50 per child.
2016 Tax Season
- 2.5% of your household income or $695 per adult, whichever is higher.
Now, penalties are calculated for every month that you or other family members are uninsured, with the exception of the “short gap”, which refer to the first 3 months that you are not insured. During this period you are exempted from the fine. Stay uninsured afterwards that and you will incur the penalties. Unless, you qualify for an exemption.
When Is Obamacare Not Mandatory?
Existing Individual Health Plans
55% of Americans are already insured through their job or family members, especially for dependents. Even if there are new requirements for job-based health plans that are outlined in Obamacare, the effect on employer-sponsored health insurance would be minimal.
Seniors on Medicare and low-income earners on Medicaid are not that affected with the Affordable Care Act, as their insurance coverage will stay the same. However, if you live in a state that participated in the Obamacare expansion of the Medicaid program, you would have to apply for Medicaid or other health plans if you now qualify for them. Single person earning less than $16,000 a year, for example, is now qualified for Medicaid provided the state they live in joined the expansion.
There are special situations or circumstances where individual mandate does not apply. If you quality for the exemptions, you can stay uninsured for as long as your circumstances remain the same. If your income falls under the Federal Poverty Guideline, for example, you will be exempted from Obamacare, but not if your income improves.
You are exempted from ACA if you satisfy the following conditions:
- Your income is so low, you don’t need to file a tax return.
- You can’t afford to pay the minimum amount of a health plan’s premium because it is 8% higher than your household income.
- You don’t have access to an affordable health coverage based on the projected income of your household.
- You are still safely within the 3-month short gap period during the year.
- You are part of a health care ministry.
- You were incarcerated and was unable to buy health insurance.
- You live in a state that did not expand their Medicaid program, resulting in you being uninsured.
- You are covered under Medicaid or TRICARE program, but the benefits do not qualify as minimum essential coverage.
- You are a member of a religious sector that has a different belief in health insurance.
- Other family members’ aggregate of health premium cost is higher than the 8% income of the entire household.
- There was a gap in your coverage at the start of 2014, but you were enrolled to a health plan on or before 1 May 2014.
- You experienced general hardship that kept you from buying a qualified health coverage.
- You failed to renew your existing insurance policy.
- There was a gap in your coverage at the start of 2014, but you applied and was qualfied for a CHIP coverage during open enrollment.
There are plenty of other exemptions that may apply to your particular circumstances, but it will only be considered as an exemption if you apply for it. That is, you should tell the government why you are exempted from Obamacare. Otherwise, you will continue to incur fines for every tax period that you are not insured.
It is vital that you obtain a code for your specific exemption. For example, the lack of access to affordable health plan because of your low household income requires an Electronic Confirmation Number (ECN), which will only be given to you upon enrollment and approval of exemption.
Is the individual mandate mandatory? Yes, except for individuals who qualify for exemptions. Everyone who is uninsured must be insured under Obamacare or face tax penalties that can take a toll on your finances. To avoid any problems, it is best to know more about Obamacare and its rules and regulations. This way, you will spare yourself from financial problems and trouble with the law.