What happens if you don't have health insurance by January 1, 2014?

WASHINGTON, December 27, 2013-With all the attention given to the Affordable Care Act (ACA) recently, surprisingly few people know exactly what happens if they are not covered by January 1, 2014. Following are a few of the most frequently asked questions regarding penalties.

What if I missed the deadline?

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Even though the Federal government extended last Monday's deadline, several states did not agree to adopt the extension and others have extended enrolment beyond the government's new deadline. It is important to check each particular state's deadline.

Individuals and families who missed the deadline can get coverage by February 1, 2014. However, to get coverage by February 1, applications must be submitted before January 15 and the first month's premium must be paid.

To be considered covered for 2014 individuals must have coverage by March 31.

What if I miss the March 31 deadline?

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If individuals and families do not buy insurance by March 31, 2014, they will not be able to buy insurance coverage on the exchange again until October 2014, when the next open enrolment begins.

Those who are uninsured for more than three months (those who do not buy insurance by March 31) in 2014 may be subject to a penalty equaling 1/12 of the yearly penalties (see below) for each month of being uninsured, unless they qualify for an exemption.

What If I don't want to buy coverage at all for 2014? (What is the penalty?)

Adults over the age of 18 who do not buy 'minimum essential coverage' by March 31, 2014 may be subject to a penalty (also known as 'individual responsibility payment' or 'individual mandate') of $95 or one percent of adjusted gross household income-whichever is greater. Individuals will also have to pay a penalty for their uninsured children under the age of 18 equal to half of the adult amount.

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Fees increase every year, rising to 2% of income or $325 in 2015 and 2.5% of income or $695 per individual in 2016. After 2016 penalties will be adjusted for inflation. The maximum penalty is capped at the national average yearly premium for a bronze plan.

Individuals who do not have health insurance in 2014 and pay the penalty will also have to pay all of their medical care expenses without protection from extremely high medical bills.

For more information see the final regulations in the Federal Register.

Will the penalty apply to me if my individual insurance policy was cancelled because it did not comply with the new law?

Due to a last minute rule change, individuals whose policies were cancelled because the policies did not comply with the new law can sign up for less expensive coverage that is not full coverage or decide not to sign up for a plan without penalty.

What kind of coverage qualifies as minimum essential coverage?

To avoid a penalty, individuals must have 'minimum essential coverage.' The Internal Revenue Service (IRS) lists what is considered minimum essential coverage, which will avoid a penalty, including employer sponsored coverage, coverage purchased in the individual market, CHIP, Medicare Part A and Advantage plans and most Medicare coverage. For a complete list visit the IRS Q & A page and scroll to question number five.

What kind of coverage DOES NOT qualify as minimum essential coverage?

Coverage providing limited benefits like vision and dental insurance as well as Medicaid covering limited benefits (workers' compensation, family planning, disability policies) does not qualify as minimum essential coverage.

What are the exemptions to the requirement of obtaining minimum essential coverage?

There are several statutory exemptions to the requirement including hardship, religious conscience and not being lawfully present in the U.S. For a complete list visit the IRS Q & A page and scroll to question number six. The Health Insurance Marketplace will be able to provide individuals with exemption certificates for most of the exemption categories.

How will the penalty be imposed?

Individuals and families will have to account for healthcare coverage in their 2014 tax returns, filed in 2015. Individuals who do not have coverage for 2014 and do not qualify for an exemption will have to pay the penalty when filing their 2014 tax return.

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