Under this law, everyone will have to have health insurance or pay a penalty (also known as an “individual shared responsibility payment”). If you choose to pay the penalty instead of securing coverage, you will still be responsible for 100% of your medical care. The penalty is calculated in one of 2 ways (you pay whichever is the higher amount). In 2014, the penalties will be calculated as:

1) 1% of your yearly household income – featuring a maximum penalty as the national average yearly premium for a bronze plan.
2) $95 per person for the year (If under age 18, then $47.50) – featuring a maximum penalty per family of $285 under this method.

It’s important to note that the penalty will change each year. In 2015, method one increases to 2% of your yearly household income and method two increases to $325 per person. In 2016, it will increase again to 2.5% for method one and $695 per person for method two. The penalty methods will be adjusted for inflation in later years.

To avoid the penalty, you need to have health insurance that qualifies as minimum essential coverage. If you have coverage under any of the following, you would be considered covered and not subject to the penalty:

  • Any health insurance plan purchased on the marketplace (or policy you already have)
  • Group health plan (including COBRA), regardless of “grandfather” status – includes retiree plans.
  • Tricare
  • Veteran’s health care programs
  • Medicare
  • Medicaid

Some programs do not meet the minimum essential benefits requirement and would not qualify to avoid the uninsured penalty:

  • Coverage for only dental or vision care
  • Coverage for a specific condition or disease
  • Plans that offer only discounts on medical services
  • Worker’s compensation

Another way to avoid the penalty is if you qualify for an exemption.  You may qualify if:

  • You were uninsured for a period of less than 3 months out of the year
  • The premium for the cheapest plan available to you would cost more than 8% of your household income.
  • You’re not lawfully present in the United States
  • You’re incarcerated

There’s also what’s known as hardship exemptions.  You may qualify if:

  • In the last six months, you were facing foreclosure or eviction
  • You received a notice from a utility company indicating a utility was being shut-off
  • You filed for bankruptcy in the last six months
  • You were homeless
  • You had medical expenses in the last 2 years that you could not pay for
  • Substantial damage was done to your property by fire, flood, or other natural or human-caused disaster
  • You began incurring unexpected increases in necessary expenses due to providing care for a disabled, ill, or aging family member
  • Your state did not expand eligibility for Medicaid under the Affordable Care Act and it resulted in your ineligibility for Medicaid
  • Your health insurance plan was cancelled and other health plans are unaffordable 

If you have any questions about health insurance plans or would like a free quote comparison, please feel free to give us a call at 1-800-571-2980. You can also reach us by e-mail at Info@terminsurancebrokers.com 24 hours a day.