The Affordable Care Act provides that starting this year, individuals must have minimum essential health coverage for each month of the year, qualify for an exemption, or pay a tax penalty.
Who Is Subject to the Requirement?
The requirement applies to all U.S. citizens living in the United States, all permanent residents, and all foreign nationals who are in the U.S. long enough to qualify as a foreign national, including children. If a child does not have minimum essential coverage, the adult who claims the child as a dependent for federal income tax purposes will be responsible for the tax penalty if the child does not qualify for an exemption.
What is minimum essential coverage?
Minimum essential coverage includes:
- Employer-sponsored coverage, COBRA coverage and retiree coverage;
- Coverage purchased through the Exchange;
- Medicare Part A and Medicare Advantage coverage;
- Most Medicaid coverage;
- CHIP coverage;
- Veterans health coverage;
- Most TRICARE coverage;
- Peace Corps volunteer coverage;
- Coverage under the Nonappropriated Fund Health Benefit Program;
- Refugee medical assistance; and
- Certain university student coverage; and
- Certain State high risk pools.
Minimum essential coverage does not include coverage providing limited benefits, such as dental-only or vision-only coverage.
What are the exemptions from the minimum essential coverage requirement?
An individual may claim one of the following exemptions from the individual mandate:
- Religious conscience;
- Health care sharing ministry;
- Indian tribe member;
- Income below the threshold for filing a tax return;
- Short coverage gap less than 3 months;
- Hardship;
- Coverage is not affordable to you (more than 9.5% of household income);
- Incarceration;
- Not in the US legally.
What happens if an individual does not have coverage in 2014?
Anyone who does not have minimum essential health coverage for each month of the year must pay a penalty. The penalty for 2014 is equal to the higher of
- 1% of yearly household income (only the amount of income above the tax filing threshold of $10,150). The maximum penalty is the national average premium charge for a bronze plan.
- $95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this calculation is $285.
The penalty increases each year.
What happens if an individual missed the deadline for enrolling in Marketplace Coverage?
Open enrollment for Marketplace (Exchange) coverage ended March 31, 2014. The open enrollment period for 2015 coverage will run November 15, 2014 through February 15, 2015.
An individual must experience a life event to qualify for special enrollment outside of the open enrollment period. Qualified life events include events such as income changes, marriage, birth, adoption, moving and losing other health coverage.
