health insurance

Though the recently signed Affordable Care Act has received enormous attention, manypeople might still be confused about exactly what the legislation requires ofindividuals. According to a helpful article by the Kaiser Family Foundation, the Affordable Care Act requires thatmany people be insured or face a penalty. The following discussion will explorehow the individual mandate works.

Whatis the individual mandate?

The individual mandate is a provision ofthe Affordable Care Act that requires every individual to have health insurancein 2014 or else pay a penalty. This coverage can be supplied through your job,through public welfare programs like Medicare or Medicaid, or through anindividual policy.

 Whois impacted by the individual mandate?

The mandate is specifically aimed atnearly 60 million people younger than 65 who do not currently have insurance. Governmentestimates say that three out of five Americans will have coverage through theiremployers while another 12 percent will be covered through a federal or stategovernment insurance program. These groups are not affected by the mandate.

Exceptionsto the individual mandate

The Affordable Care Act includes severalexemptions. One primary exempt group includes those who cannot afford coveragedue to high premium costs or a low household income. Native Americans,prisoners, illegal immigrants and those with certain religious objections arealso exempt from the individual mandate.

Whendo you have to report insurance coverage?

The current law states that individualcoverage or exemptions will not need to be reported until you file your 2014income tax return, which will not be due until April 15, 2015.

Whathappens if you don’t get coverage? 

Those who are not exemptfrom the penalty and who still choose not to get covered they will face apenalty imposed by the IRS at the end of the tax year. The penalty for thefirst year of noncompliance is $95 per adult and $47.50 per child, or 1 percentof your family’s income, whichever is greater. Though this may not seem likemuch of a fine, it’s important to note that the fines will increase over timeand eventually grow to $695 per adult or 2.5 percent of family income,whichever is greater.