Health Care Reform

Individual Mandate

Effective January 1, 2014, all individuals must obtain minimum essential coverage or pay a penalty. The penalty is applied for each month during which an individual doesn't have minimum essential coverage. The penalty for any month is 1/12th the greater of a flat dollar amount ($95 in 2014 phased up to $695 in 2016) or a specified percentage of household income (1% in 2014 phased up to 2.5% in 2016). Penalties are 50% for children under age 18. The maximum family penalty is three times the penalty that applies for adults. The penalty is capped at the amount the individual or family would have to pay for the average cost of bronze level Exchange coverage.

Exemptions are available for individuals who can't afford employer coverage (e.g., if required contributions for the lowest-cost employer option exceed 8% of the individual's household income), who are low-income taxpayers, who have coverage gaps of less than three months, who are members of Indian tribes or who are determined to have suffered a hardship. The flat dollar amounts are indexed to CPI-U. Premium assistance is available for individuals with family income up to 400% of the federal poverty level.

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Individual Mandate Hot Topics & FAQs

  • Supreme Court To Hear Arguments on the Health Care Reform Law Beginning Monday, March 26, 2012
    Below is the schedule of Supreme Court arguments which begin today on the Health Care Reform law. The Court has committed to posting written and audio transcripts of the arguments each day by 2:00 pm Eastern. These will be available on their public website www.supremecourt.gov.
    • Monday, March 26: Anti-injunction act (90 minutes) (Can the litigation proceed at this time, or does the anti-injunction act force the parties to wait until after the government enforces the individual mandate?)
    • Tuesday, March 27: Individual mandate (2 hours) (Is the individual mandate constitutional?)
    • Wednesday, March 28 (am): Severability (90 minutes) (If the individual mandate is unconstitutional, can it be severed from the health reform law or must the entire law be held unconstitutional?)
    • Wednesday, March 28 (pm): Medicaid (1 hour) (Is the Medicaid expansion constitutional?)
  • Does an employer plan qualify as "minimum essential coverage" for purposes of the individual mandate?
    Answer: Yes. In fact, any employer-sponsored major medical coverage (that does not qualify as a HIPAA excepted benefit) will satisfy an employee's obligation to obtain minimum essential coverage. An insurance plan purchased through a state Exchange is another example of qualifying minimum essential coverage.

American Fidelity Assurance Company does not provide tax or legal advice.

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