Information For Individuals

Health Care Reform requires all individuals to have health insurance in 2015 or pay a penalty on their income taxes. Here are details on both the penalty and cost of coverage. Open enrollment for new individual coverage has closed for calendar year 2016 and will not reopen until November 1st, 2016. However, if you have a qualifying event, listed below, you can enroll in health insurance anytime with 60 days of the event.

Qualifying Events

Individuals may still be able to apply for coverage before the next annual open enrollment if they, or someone in their family, has a qualifying life event. Qualifying life events, which create a special enrollment period, are defined in federal law. Certain events may require certification from the Federally Facilitated Marketplace (the Exchange).

The following are some examples of common qualifying life events. This is not a complete list and there may be other events that apply. Federal law determines whether an event is a “qualifying” event.

  • The individual, or someone in their family, has:
    • Married someone
    • Had a baby
    • Adopted a child, or had a child placed for adoption
  • Individual, or someone in their family, has lost minimum essential health insurance through job loss, divorce, expiration of COBRA coverage, or other, similar situations
  • Individual, or someone in their family, has lost eligibility for Medicaid (AHCCCS) or Children’s Health Insurance Program (CHIP)
  • Individual has moved to a new home in an area with different health plan options
  • Individual, or someone in their family, no longer has access to health insurance that is considered “affordable” under federal law, or which provides “minimum value”
  • There was an error in the enrollment process for Individual’s current plan (as defined in federal law)
  • Individual’s plan or issuer has substantially violated a material provision in the current plan
  • Individual, or someone in their family, has become eligible or ineligible for federal financial help to pay for health insurance or health care costs due to a change in income

Voluntarily quitting other health coverage or being terminated for not paying premiums is not considered loss of coverage. Losing coverage that does not qualify as “minimum essential coverage” under federal law, is not considered a qualifying event.

The Individual Mandate (Penalty)

2014 was the first year of the penalty, which started at the greater of $95 per person or 1 percent of income. For 2015, the penalty has increased to the greater of $325 per person or 2 percent of income. In 2016 and after, the penalty increases to $695 per person or 2.5 percent of income. “Income” for this purpose is your household income minus your exemption (or exemptions for a married couple) and standard deductions. Families will pay half the penalty amount for up to two children. The penalty is calculated on a monthly basis, and will be assessed for each month in which you go without coverage. There is no penalty for a single lapse in coverage lasting less than three months in a year.

Bottom line: If you are married, have two children, and household income of $50,000, your penalty is 2% of $50,000, or $1,000.

But there is good news. You may be exempt from the individual mandate penalty if you:

  • Cannot afford coverage (that is, a required contribution for coverage would cost more than 8 percent of your household income)
  • Have income below the federal income tax filing threshold
  • Are not a citizen, national or lawfully present in the United States
  • Experience a gap in coverage for less than a continuous three-month period
  • Qualify as a religious conscience objector
  • Are a member of a health care sharing ministry
  • Are a member of certain Indian tribes
  • Are given a hardship exemption by HHS
  • Are incarcerated

Exchange Plans and Subsidies

Health care is not free, but you can purchase it through the Federally Facilitated Marketplace or Exchange during an open enrollment period or anytime with a qualifying event.
Four plans are available:

  • Bronze. Lowest priced, qualifies for the subsidy and covers 60% of your healthcare expenses.
  • Silver. Next lowest priced, also qualifies for the subsidy and covers 70% of your healthcare expenses.
  • Gold. Second most expensive plan. DOES NOT qualify for the subsidy and covers 80% of your healthcare expenses.
  • Platinum. The most expensive option DOES NOT qualify for the subsidy and covers 90% of your healthcare expenses.

If you are under thirty years old, you have a fifth option, which is a catastrophic plan. It is the least expensive, but has a high deductible.

The Federal Government will help you pay for your coverage if you qualify for the federal subsidy. The amount of subsidy varies, depending on your age, income, number of dependents and plan you purchase. Click here to find out more about the cost of coverage and your subsidy.

Confused? Should you pay the penalty or buy coverage? Contact us and we will help.