The Departments of Health and Human Services (HHC) and Treasury issued a proposed rule describing what will be considered "minimum essential coverage" for purposes of health care reform. Beginning January 1, 2014, health care reform requires a non-exempt individual to have and maintain minimum essential health coverage or pay a penalty on their income tax returns. Limited classes of individuals, such as those with certain religious beliefs or those who do not have an affordable health option available, are exempt from the requirement. All other individuals must have health coverage that meets the minimum essential requirements.
Exempt Individuals
The proposed rule discusses who is exempt from the requirement to maintain minimum essential coverage, explains how the penalty will be calculated, and documents when an individual is deemed to have minimum essential coverage.
The guidance explains when an individual will be deemed exempt from the requirement. Specifically, an individual will not be required to maintain minimum essential coverage if the individual falls into one of the following exceptions:
- Member of a religious group that is recognized as conscientiously opposed to insurance benefits
- Health care sharing ministry member
- Indian tribe member
- Household income below the minimum threshold for filing a tax return
- Short coverage gap of less than 3 months
- Certified hardship making it unable to obtain coverage
- Minimum amount to pay for premiums is more than 8% of household income
- Incarcerated
- Not a lawful US citizen or national.
Those who claim exemption must receive an exemption certificate from the Exchange.
Minimum Essential Coverage
The proposed rule also (1) designates certain types of existing health coverage as minimum essential coverage and (2) provides standards for determining if other types of health insurance is minimum essential coverage.
By statute, minimum essential coverage includes:
- Employer-sponsored coverage
- Individually-purchased coverage
- Medicare coverage
- Medicaid coverage
- CHIP coverage
- Peace Corps Plan
- Department of Defense Plan
- TRICARE
The proposed guidance provides that the following types of coverage will be designated as minimum essential coverage:
- Self-funded student health insurance plans
- Foreign health coverage
- Refugee medical assistance
- Medicare advantage plans
- AmeriCorps coverage
Minimum essential coverage does not includes specialized coverage such as vision-only plans, dental-only plans, workers' compensation or disability policies.
Who is Subject to Requirement?
All individuals are subject to the minimum essential coverage requirement, including children. Each child must have minimum essential coverage or qualify for an exemption for each month in the calendar year. Otherwise, the adult or married couple who can claim the child as a dependent for federal income tax purposes will be subject to the penalty. These requirements go into effect January 1, 2014 and apply to each month in the calendar year.
