What if I can’t afford Health Coverage in 2014?

f you can afford health insurance and don’t have coverage in 2014, you might have to pay a fine. They also have to pay for all of their health care.

The fee is called the “individual responsibility payment,” “individual mandate,” or penalty.

If you’re uninsured and need care

When someone without health coverage gets unexpected medical care but refuses to  pay the bill, everyone else pays the price.

That’s why the law now requires all people who can afford it to take responsibility for their own health insurance by getting coverage or paying a fine.

People without health insurance who pay the penalty will also have to pay the entire cost of all their medical care. They won’t be protected from the very high medical bills that can ultimately lead to bankruptcy.

The penalty in 2014 and beyond

The penalty in 2014 is calculated in one 2 ways. You pay whichever amount is higher:

  • 1% of your yearly household income. The maximum penalty is the national average yearly premium for a bronze plan.
  • $95 per person for the year ($47.50 per child under 18). The maximum fine per family is $285.

The fee gradually increases every year. In 2015 it will be 2% of income or $325 per person. In 2016 and beyond it goes to 2.5% of income or $695 per person. After that it is adjusted for inflation.

If you’re uninsured for part of the year, 1/12 of the yearly fine applies to each month you’re uninsured. If you’re uninsured for less than 3 months there will be no penalty

 Learn more about you responsibility from the Internal Revenue Service.

Enroll by March 31, 2014 and you won’t have a penalty

If you enroll in a health insurance plan through the Marketplace by March 31, 2014, you won’t have a fine.

For example, if you enroll in a Marketplace plan on March 31 and your coverage begins a month or two later and If you didn’t have coverage before, you won’t have to pay a fine for any part of 2014.

If you pay the penalty, that doesn’t mean you have coverage

It’s important to remember that if you choose to pay the penalty instead of getting covered it doesn’t mean you have health insurance coverage. You will still be responsible for 100% of any medial care you receive.

Open enrollment happens once a year it ends on March 31, 2014, you will not be able to get insurance through the Marketplace until the next the enrollment period, unless they have a qualifying life event**.

Minimum essential health coverage

If you’re covered by any of the following in 2014, you’re considered covered and don’t have to pay a fine:

  • Any plan bought throght the Marketplace, or individual coverage you already have
  • Medicare
  • Medicaid
  • TRICARE (military insurance)
  • Any employer plan (including COBRA), with or without “grandfathered” status. This includes retiree plans
  • The Children’s Health Insurance Program (CHIP)
  • Veterans health care programs (including the VA Civilian Health and Medical Program (CHAMPVA), Veterans Health Care Program,and Spina Bifida Health Care Benefits Program)
  • Peace Corps Volunteer plans

Ask an insurance agent today if your plan qualifies.

What kind of health insurance doesn’t qualify as coverage?

Health plans that don’t meet minimum essential coverage don’t qualify as coverage in 2014. If you have only these types of coverage, you may have to pay the fee. Examples include:

  • workers’ compensation
  • only for vision care or dental care
  • plans that offer only discount medical plans
  • only for a specific disease or condition

Exemptions from the fee

People with limited incomes and other situations can get exempt from the fine.

You may qualify if:

  • You’re uninsured for less than 3 months of 2014
  • The cheapest coverage available for you would cost more than 8% of your household income
  • If your income is too low to file a tax return
  • You’re a member of a recognized health care sharing ministry
  • You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
  • You’re a member of a recognized religious sect with religious objections to insurance.
  • You’re not legally in the U.S.
  • You’re incarcerated, and not awaiting the disposition of charges against you

Hardship exemptions

If you have any of the circumstances below apply to you and affect your ability to purchase health insurance, you may be able to apply for a “hardship” exemption:

  1. If you were homeless.
  2. If you were evicted in the past 6 months or  facing eviction or foreclosure.
  3. If you received a shut-off notice from a utility company.
  4. If you recently experienced domestic violence.
  5. If you acquired medical expenses you couldn’t pay in the last 2 years
  6. If you plan to claim a child as a tax dependent who has been denied coverage in Medicaid and CHIP, and another person is required by the courts to give medical support to said child. In this case, you do not have the pay the child’s fee
  7. If you recently experienced the death of a close family member.
  8. If you filed for bankruptcy in the last 6 months.
  9. .You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.
  10. If you experienced a fire, flood, or other disaster that caused significant damage to your property.
  11. If you experienced significant unexpected increases in expenses due to caring for an ill, disabled, or aging family member.
  12. As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace.

How to apply for an exemption

If you are applying for an exemption based on: coverage being unaffordable; membership in a federally-recognized tribe; membership in a health care sharing ministry; or being incarcerated:

  • You can claim this on your 2014 federal tax return.
  • Or you can apply in the Health Insurance Marketplace

If you have a gap in coverage of less than 3 months, or you are not legally in the U.S.:

  • You don’t need to apply for an exemption. This will be handled when you file your taxes.

If you’re applying for an exemption based on: membership in a recognized religious sect whose members object to insurance; eligibility for services through an Indian health care provider; or one of the hardships described above:

  • You apply for an exemption in the Marketplace

If your income is to low that you will not be required to file taxes:

  • You don’t need to apply for an exemption.

**Examples of qualifying life events are moving to a new state, specific changes in your income, and changes in your family  (marriage, divorce, or having a baby)