Individuals: Am I required to have health insurance?

Beginning in 2014, most Americans will be required to have health insurance or pay a penalty.

This aspect of the law is known as the individual mandate. It was upheld by the U.S. Supreme Court in July 2012.

So what is the penalty?

In 2014, the penalty is $95 for single coverage or 1% of household income, whichever is greater. The penalty increases each year until it caps in 2016 at flat dollar amount of $695 or 2.5% of household income. The flat dollar amount penalty is charged per adult. The penalty for not having one’s children covered is half of the adult rate. (Families will only be charged for the first three children.)

The penalty is pro-rated for the number of months without coverage. Therefore, individuals who are covered for six months of the year would pay half the annual penalty.

Are there any exceptions to the mandate?

The law establishes a list of exemptions to the individual mandate. Individuals who meet any of the following criteria will not be penalized if they fail to elect coverage:

  • Individuals between jobs and without insurance for up to three months.
  • Those who have religious objections.
  • Undocumented immigrants
  • Incarcerated
  • Members of an Indian tribe

Some individuals and families may be exempt from the individual mandate penalty due to financial issues. The law protects the poor from this additional burden by stating individuals and families whose household income is below the threshold required for filing income taxes are exempt. In 2013, that amount is $10,000 for individuals and $20,000 for families. Finally, if the cost of coverage following any employer contributions or federal assistance (tax credits, subsidies) is more than 8% of income, no penalty will be assessed.

Transitional relief

Individuals whose pre-ACA coverage was terminated because it did not meet requirements and who were unable to find otherwise affordable coverage are given transitional relief for the 2014 tax year.

In additional, employees who did not elect their employer’s non-calendar year plan will not be fined for their months without coverage as long as they elect coverage at the first renewal in 2014.