The Individual Mandate: Has the Obama Administration Silently Repealed the Rule that Virtually Everyone Must Have Health Insurance?

Obamacare’s critics continue to argue that the Affordable Care Act (ACA) will self-destruct.  Now, some claim that the mandate that uninsured Americans must purchase coverage– or pay a stiff fine— is so riddled with new “loopholes and exemptions,” that it no longer exists.

                                            14 New Waivers

When the ACA passed Congress in 2010, it offered a handful of basic exemptions to the mandate that everyone must be insured. For example, if the only comprehensive coverage available would cost more than 8% of a household’s income, the fine would be waived. Individuals who were in jail, or belonged to a recognized religious group that objects to all insurance, including Medicare and Social Security, also would be excused.  

But then, late in 2013, the administration quietly added some 14 new ways that uninsured Americans could dodge the fine. “This latest reconstruction” of the ACA received zero media coverage,” a Wall Street Journal editorial declared, “and the Health and Human Services Department (HHS) didn’t think the details were worth discussing in a conference call, press materials or fact sheet.”

Yet if the new waivers went largely unnoticed, reform’s opponents claim that the swelling list of escape clauses will have a huge impact. By 2016, they say, almost 90% of the nation’s 30 million uninsured will be able to ignore the mandate that they buy insurance—without paying the piper.  So much for universal coverage.

Just last week Bloomberg reported that some Republicans politicians now refer to the new list of loopholes as a “stealth repeal” of the individual mandate. To her credit, Bloomberg’s Caroline Chen points out the contradiction in the GOP’s arguments: the same critics who, in the past, argued that the mandate represented “unwarranted government coercion” now criticize it for being too “wimpy.” Can they really have it both ways?

                                       “Hardship Exemptions”

The new waivers were designed to help those who are facing hard times.  Some exemptions will suspend penalties for 3 months—others for a year.

Perhaps the most important waiver bails out low-income Americans who have the bad luck to live in a state that has refused to expand Medicaid.  Originally, the ACA stipulated that states must extend Medicaid to adults earning less that 138 percent of the federal poverty level ($27,310 for a family of three), with the Federal government paying the lion’s share of the extra cost. At the same time, the ACA set out to help low and middle-income families earning more than 138% of the FPL, by providing government subsidies designed to help them purchase insurance in their state exchanges.

But then, two years after the ACA passed Congress, the Supreme Court blind-sided reform’s architects by ruling that states could opt out of expanding the federal/state. program. No surprise, politicians in Red states saw this as an opportunity to undermine Obamacare.

Today, twenty-two states still are refusing to open the Medicaid umbrella to cover some of their poorest citizens. As a result, in many cases, only parents earning less than 50% of poverty ($9,893 for a family of three) qualify for Medicaid, while childless adults remain ineligible in almost all of these states.  (When Medicaid passed Congress in 1965 legislators decided that only “the worthy poor” should be covered. People who didn’t have children were not considered “worthy”.)

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Obamacare Fines: How to Escape a Hefty Penalty If You Really Can’t Buy Insurance

Already, the fear-mongers are sounding the alarm: If you don’t purchase exactly the type of health insurance that the Affordable Care Act (ACA) requires, come tax-time the IRS will slap you with a stiff penalty.

As I explain in the post below, the ACA mandates that if you’re not already covered, you must buy insurance that includes “essential benefits” such as hospitalization, maternity and newborn care, and mental health services. Ignore the mandate this year, and you will be fined when you file your taxes next year.

                                 How Much Would You Owe?

If  you opt out of purchasing insurance that covers you and your family in 2015, the penalty will equal Either:

“Whichever is greater” means that wealthier taxpayers will be required to pay 1% of their income, and as a result can easily wind up owing significantly more than $285. This doesn’t mean that millionaires would be fined tens of thousands of dollars. An affluent family’s penalty also is capped, at the average cost of bronze plans sold in state Exchanges nationwide.

In  2014, nationwide, the average bronze plan premium was $2,448 per individual and $12,240 for a family with five or more. This year, across the nation, average premiums were slightly higher, so a family of five earning more than roughly $145,000 would have to fork over a little more than $12,240.

                         If This Sounds Complicated, Turbo-Tax Makes it Simple

If, at this point, your eyes are glazing over, the good news is that you can calculate your penalty, quickly and easily, on Turbotax’s online calculator. Just type  in your income, zip code, and  the size of your household, and in about three minutes, TurboTax will tell you  the size of your fine—and, most importantly, whether you might qualify for an exemption to the penalty.

                                 How You Might Escape the Fine

The  chances that the IRS will fine you are slim. What the fear-mongers rarely mention is that, thanks to the many exemptions built into the law, only about 10 percent of the uninsured will owe a penalty. The Congressional Budget Office (CBO) estimates that in 2016,  just 4 million uninsured Americans will face fines, while 26 million will qualify for waivers. 

Recently, I wrote a piece for Consumer Reports listing some of the most common exemptions:

  •  if the lowest-priced coverage available to you, even after applying  a government subsidy, would cost more than 8 percent of your household’s income, the fine is waived;
  • –if you earn less than $10,150 (or $20,300 for a married couple) and so are not required to file income taxes you owe no fine and don’t even have to apply for a wavier;
  • if you were uninsured for less than 3 consecutive months, you will not be fined.

(As I explain in the post below,  this means that if you sign up for 2015 coverage by February 15 you will be insured as of March 1, and will not owe a penalty for 2015.) 

                       Little Known “Hardship Exemptions”               

On the Consumer Reports website, I also point out that late in 2013, the government added 14 new waivers

 

for people who have experienced personal hardships such as domestic violence, substantial property damage from a fire or flood, from a fire or flood, the death of a close relative, a utility cut-off, or bankruptcy.

Perhaps most importantly, the government is offering a one-year waiver to people who don’t qualify for Medicaid because they live in a state that has refused to expand the program under ACA rules.

To learn more about the hardship exemptions, how to apply for any exemption, and information on how you might escape the penalty, but still buy catastrophic insurance, read the rest of the post on Consumer Reports.org.

 

 

 

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It’s not too late to sign up for Obamacare- But if you wait much longer you could face a fine

 Note to HealthBeat readers: I have recently begun writing posts about healthcare and healthcare reform for Consumer Reports. Below, an excerpt from my latest post. M.M

It’s still not too late to sign up for insurance in your state’s marketplace. Open enrollment for Obamacare continues until Feb. 15. Meet that deadline, and you will be insured on March 1, with no penalty.

And if the plan you purchased in 2014 was automatically renewed on Jan. 1, you can still change your mind, comparison shop, and pick a new policy in February. There are lots of good reasons to shop around, as plans change from year to year.

Even better news: It’s not too late to apply for a tax credit that can help slash premiums. This year, nearly 9 out of 10 people who purchased insurance in state marketplaces have qualified for financial assistance. Last year, tax credits cut the average premium by 76 percent—to just $82 per month. Almost half of those who received subsidies wound up paying $50 or less. See if you might qualify for a subsidy.

Who has to pay fines?

Even if you don’t have insurance in January and February, you won’t have to pay a fine as long as you have health insurance in place by March 1.

How much will you owe?  Compare penalties to premiums in your zip code

Turbotax has created an online calculator that tallies the fine if you don’t buy insurance by Feb. 15.

To compare the fine to the cost of coverage, after subsidies, use the Kaiser Family Foundation’ premium calculator.

You will find links to both when you read the rest of this post on Consumer Reports.org.

 

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