Am I required to buy health insurance?
Yes, you are required to have health insurance coverage – or more precisely, “minimum essential coverage” – or else pay a tax penalty, unless they qualify for an exemption. This requirement is called the individual responsibility requirement, or the individual mandate.
The penalty for not having minimum essential coverage is either a flat amount, or a percentage of household income, whichever is greater. The penalty will be phased in.
In 2014, the penalty is the greater of
- $95 for each adult and $47.50 for each child, up to $285 per family, or 1% of family income minus the federal tax filing threshold, which is $10,000 for a person who files singly, $20,000 for somebody who files jointly
- In 2015, the penalty is the greater of $325 for each adult and $162.50 for each child, up to $975 per family, or 2% of family income above the federal tax filing threshold
- In 2016, the penalty is the greater of $695 for each adult and $347.50 for each child, up to $2,085 per family, or
- 2.5% of family income above the federal tax filing threshold
- In later years, the flat penalty amounts for 2016 will be indexed based on the cost of living.
In all years, the penalty is also capped at an amount equal to the national average premium for the lowest cost bronze health plan available through the Marketplace.
The penalty is assessed based on “coverage months.” This means that each month you are uninsured, you may owe 1/12th of the annual penalty. However, short spells of uninsurance may not be subject to a penalty.
Are there exemptions to the penalty?
Yes. You may be eligible for an exemption if you:
- Cannot afford coverage (defined as those who would pay more than 8 percent of their household income for the lowest cost bronze plan available to them through the Marketplace)
- Are not a U.S. citizen, a U.S. national, or a resident alien lawfully present in the U.S.
- Had a gap in coverage for less than 3 consecutive months during the year
- Won’t file a tax return because your income is below the tax filing threshold (In 2013, the tax filing threshold is $10,000 for individuals and $20,000 for a couple)
- Are unable to qualify for Medicaid because your state has chosen not to expand the program
- Participate in a health care sharing ministry or are a member of a recognized religious sect with objections to health insurance
- Are a member of a federally recognized Indian tribe
- Are incarcerated
Others who do not qualify through these categories but have experienced a hardship that makes it difficult to purchase insurance may apply through the health insurance marketplace for an exemption to the individual responsibility requirement.