ObamaCare’s Individual Mandate Getting Close

There are 16 provisions of the ObamaCare that are slated to take effect on January 1, 2014 (Kff.org, 2013). Only 15, however will get implemented as President Obama postponed the implementation of the Employer Requirements until 2015.  The employer requirement is just one of the major provisions of the health care law.  Other 2014 major provisions that are noteworthy to mention are individual mandate to have insurance, health insurance exchanges, the Medicaid expansion, and health insurance premium and cost sharing subsidies. This article will focus on the individual mandate.

The ObamaCare requires that all U.S. citizens and its legal residents must have health insurance starting January 1, 2014. This is the so-called “individual mandate.”  Obama’s approach to this mandate is to create state-based American Health Benefit Exchanges through which individuals can purchase coverage, with premium and cost-sharing credits available to individuals/families with income between 133-400% of the federal poverty level with the poverty level being in the $19,530 range for a family of three in 2013. Small businesses are invited to purchase coverage from these Exchanges (Kff.org, 2013). Open enrollment for these exchanges starts on October1, 2013 and ends on March 31, 2014 (Healthcare.gov, 2013).

In order for this mandate to be effective, those who chooses to remain without a coverage will pay a tax penalty of the greater of $695 per year up to a maximum of three times that amount ($2,085) per family or 2.5% of household income (Kff.org, 2013). Expect that the Internal Revenue Service (IRS) to be vigilant on this as new hires will probably monitor disobedience of the law.

The penalty will be phased-in according to the following schedule: $95 in 2014, $325 in 2015, and $695 in 2016 for the flat fee or 1.0% of taxable income in 2014, 2.0% of taxable income in 2015, and 2.5% of taxable income in 2016. These penalties will increase correspondingly annually with the annual cost-of-living adjustment, starting in 2016 (Kff.org, 2013).

Of course there will be exemptions to the rule! Exemptions will be granted for those who can’t really afford it (financial hardship), for those whose religions forbids them from joining in (religious objections), the original settlers of this country (American Indians), those without coverage for less than three months (this is ambiguous), undocumented immigrants (very clear), incarcerated individuals (very clear), those for whom the lowest cost plan option exceeds 8% of an individual’s income, and those with incomes below the tax filing threshold (in 2009 the threshold for taxpayers under age 65 was $9,350 for singles and $18,700 for couples).  In sum, people below the federal poverty level, American Indians, religious objectors, the undocumented immigrants, and inmates are not obligated to pay penalties (Kff.org, 2013).

 Cesar Aquino, MBA, CT (ASCP), is a Cytotechnologist with the Riverside County Regional Medical Center in Moreno Valley, California and currently a PhD candidate in Healthcare Administration.