What happens if the poor, welfare recipients, or illegals don’t obtain coverage?

Certain individuals are exempt from the individual mandate and therefore will not pay a penalty for not maintaining minimum essential coverage.  The exemptions include, among others, individuals who cannot afford coverage and individuals not lawfully present.  Individuals who cannot afford coverage means the individual’s required contribution for coverage for the month exceeds 8% of the individual’s household income.

What if I decide my plan is too expensive?

Individuals who cannot afford coverage, meaning the individual’s required contribution for coverage for the month exceeds 8% of the individual’s household income are exempt from the individual mandate and thus will not be subject to the penalty.
There are also options that make coverage more affordable. If your household income for the taxable year is below 138% of the federal poverty level (FPL), you may be eligible for Medi-Cal if you also meet the other eligibility requirements. If your household income for the taxable year is within 138% and 400% of the FPL, you may be eligible for premium assistance through Covered California if you also meet the other eligibility requirements. If your household income for the taxable year is within 138% and 250% of the FPL, you may also be eligible for a cost-sharing reduction through Covered California if you meet the other eligibility requirements. However, cost-sharing reductions are only available to people who enroll in a silver plan through Covered California.
See pages 8-19 in the Eligibility for Individuals and Families participant guide.

Which religious groups are exempt from the individual mandate?

An individual is exempt from the individual mandate if the individual is a member of a recognized religious sect and is an adherent of the established tenets or teachings of such sect that is conscientiously opposed to acceptance of the benefits of any private or public insurance which makes payments in the event of death, disability, old-age, or retirement or makes payments toward the cost of, or provides services for, medical care (including the benefits of any insurance system established by the Social Security Act).

Who are the exempt from the individual mandate?

1. Religious conscience. Individuals that are members of a religious sect that is recognized as conscientiously opposed to accepting any insurance benefits. The Social Security Administration administers the process for recognizing these sects according to the criteria in the law.
2. Health care sharing ministry. Individuals that are members of a health care sharing ministry. To qualify for this exemption, the individual must be a member of a health care sharing ministry that 1) has been in existence (and sharing medical expenses) at all times since December 31, 1999, and 2) conducts an annual audit by an independent certified public accountant, available to the public upon request.
3. Indian tribes.  (1) Members of a federally recognized Indian tribe, or (2) Individuals eligible for services through an Indian care provider.
4. Income below the income tax return filing requirement. Individuals whose household income is less than the filing threshold for federal income taxes for the applicable tax year. The requirement to file a federal tax return depends on filing status, age, and types and amounts of income.
5. Short coverage gap. Individuals without coverage for less than three consecutive months during the year. This exemption applies only to the first short coverage gap in a calendar year.
6. Hardship. Any individual whom the Secretary of Health and Human Services (HHS) determines to have suffered a hardship with respect to the capability to obtain coverage. Individuals who obtain hardship exemptions are eligible for catastrophic coverage.
7. Affordability. Individuals whose required contribution for self-only coverage exceeds 8% (indexed annually) of household income. Individuals who obtain affordability exemptions are eligible for catastrophic coverage.
8. Incarceration. Individuals in a jail, prison, or similar penal institution or correctional facility after the disposition of charges against them.
9. Not lawfully present. Individuals not lawfully present in the U.S. and are not a U.S. citizen, or U.S. national.

Is the penalty calculated monthly or annually?

The penalty amount is an annual amount.  However, the penalty is based on the number of months in which the individual lacked coverage.  Hence, if an individual had coverage or an exemption for part of the year, the penalty amount is divided by 12 to get the monthly penalty amount.

Note:  Individuals are exempt from the penalty for short coverage gaps, which is a continuous period of less than 3 months.

Are U.S. citizens and U.S. residents living abroad subject to the individual shared responsibility provision?

Yes, with the following exemptions:

• U.S. citizens who are physically present in a foreign country for at least 330 full days during any period of 12-consecutive months are exempt from the individual shared responsibility payment for any month in the tax year that is included in that 12-month period.
• U.S. citizens who are bona fide residents of a foreign country for an uninterrupted period which includes an entire taxable year are exempt for that year.
• Resident aliens who are citizens or nationals of a foreign country with which the U.S. has an income tax treaty with a nondiscrimination clause, and who are bona fide residents of a foreign country for an uninterrupted period that includes an entire tax year also are exempt.

U.S. citizens who meet neither the physical presence nor residency requirements will need to maintain minimum essential coverage, qualify for a coverage exemption or make a shared responsibility payment. For this purpose, minimum essential coverage includes a group health plan provided by an overseas employer and certain expatriate health plans. One exemption that may be particularly relevant to U.S. citizens living abroad for a small part of a year is the exemption for a short coverage gap. This exemption provides that no shared responsibility payment will be due for a once-per-year gap in coverage that lasts less than three months.

Are all individuals living in the United States subject to the individual shared responsibility provisions?

All of the following are subject to the individual shared responsibility provisions:

• S. citizens living in the U.S.;
• Permanent residents;
• Foreign nationals who are in the U.S. long enough during a calendar year to qualify as resident aliens for tax purposes; and
• Nonresident aliens who meet certain presence requirements and elect to be treated as resident aliens.

The following are exempt from the individual shared responsibility provisions:

• Foreign nationals who live in the U.S. for a short enough period of time that they do not become resident aliens for federal income tax purposes even though they may have to file a U.S. income tax return. The IRS has more information available on when a foreign national becomes a resident alienfor federal income tax purposes;
• Nonresident aliens;

• Dual-status aliens in their first year of U.S. residency;
• Nonresident aliens or dual-status aliens who elect to file a joint return with a U.S. spouse;
• Individuals who file a Form 1040NR or Form 1040NR-EZ (including a dual-status tax return for their last year of U.S. residency);
• Individuals who are claimed as a personal exemption on a Form 1040NR or Form 1040NR-EZ;
• Individuals who are not lawfully present in the United States and not U.S. citizens or U.S. nationals.  An immigrant with Deferred Action for Childhood Arrivals (DACA) status is considered not lawfully present and therefore is eligible for the exemption.  An individual may qualify for the exemption even if he or she has a social security number (SSN).

Are individuals required to buy standalone pediatric dental plans since it’s an essential health benefit?

No.

Does temporary insurance satisfy the requirement to maintain minimum essential coverage?

It depends on the type of coverage.  Excepted benefits is not minimum essential coverage.  This includes coverage only for accident, or disability income insurance; liability insurance; coverage issued as a supplement to liability insurance; workers’ compensation; automobile medical payment insurance; credit-only insurance; coverage for on-site medical clinics; other similar insurance coverage, under which benefits for medical care are secondary or incidental to other insurance benefits.  Moreover, the following are excepted benefits if the benefits are provided under a separate policy, certificate, or contract: limited scope dental or vision benefits; benefits for long-term care, nursing home care, home health care, community-based care; coverage only for a specified disease or illness; hospital indemnity or other fixed indemnity insurance; Medicare supplemental health insurance; and similar supplemental coverage provided to coverage under a group health plan.

Non-exempt individuals and their dependents are required to maintain minimum essential coverage for each month beginning in 2014.  However, each individual can be without coverage for a continuous period of less than three months during a calendar year and not be subject to the penalty.

As rates continue to rise dramatically how is it determined who is eligible for the “cannot afford coverage” exception?

If the individual’s required contribution for coverage for the month exceeds 8% of the individual’s household income, then the individual cannot afford coverage. If the individual is eligible for an eligible employer-sponsored plan, the required contribution is the portion of the annual premium which would be paid by the individual for the lowest cost self-only coverage or lowest cost family coverage that would cover the employee and all related individuals in the employee’s family. If the individual is not eligible for an eligible employer-sponsored plan, the required contribution is the annual premium, reduced by the amount of premium assistance allowable, for the lowest cost bronze plan available in the Individual Marketplace in the rating area in which the individual resides.