Health care reform: Know the rules and penalties of the individual mandate

May 29, 2013

The individual mandate starts in January 2014 and is an important part of the Affordable Care Act. The individual mandate requires people legally living in the U.S. to buy a minimum amount of health coverage unless they are exempt. In general, people who don’t have to file taxes due to low income are exempt from the individual mandate.

But how does it work? And what are the penalties for people who don’t get coverage?

How the individual mandate works

When people file their 2014 taxes in 2015, they’ll need to report whether or not they had health coverage in 2014. If they did have coverage, they will need to report if they qualified for a tax credit or subsidy. Health coverage includes a group plan, an individual plan, Medicare or Medicaid. If they don’t have health coverage, they could face a tax penalty. Each year, the penalty increases.

What are the tax penalties?

If a person doesn’t have a health plan, he or she will pay a tax penalty as follows:.

  • 2014: Penalty is the larger amount – $95 or 1% of taxable earnings
  • 2015: Penalty is the larger amount – $325 or 2% of taxable earnings
  • 2016: Penalty is the larger amount – $695 or 2.5% of taxable earnings

What happens if your clients can’t pay for a plan?

People may qualify for a tax credit through the exchange based on their incomes. People earning between 100% and 400% of the federal poverty level can qualify if they are not eligible for other sources of minimum essential coverage, including government-sponsored programs such as Medicare and Medicaid.

This includes:

  • Individuals with modified adjusted gross incomes of $11,490 to $45,960 a year
  • Families of four with modified adjusted gross incomes of $23,550 to $ 94,200 a year.

People may qualify for cost-sharing subsidies based on their income. This includes:

  • Individuals with modified adjusted gross incomes of $11,490 to $28,725 a year.
  • Families of four with modified adjusted gross incomes of $23,500 to $58,875 a year.

To learn about other health care reform topics, check out the timeline and FAQs on our broker/employer health care reform website or visit our member website,

This article applies to:

  • California, Wisconsin, Virginia, Ohio, New York, Nevada, New Hampshire, Missouri, Maine, Kentucky, Indiana, Georgia, Connecticut,  and Colorado
  • Small Group, Large Group,  and Individual (under 65)

Some California leaders want low-cost health care for undocumented immigrants

The Sacramento Bee by J. Sanders –

April 19, 2013:

About a million of California’s poorest undocumented immigrants would have access to basic low-cost health care under a plan being pushed at the Capitol.

President Barack Obama’s federal health care overhaul excludes undocumented immigrants, but some California leaders want to fill that gap by offering a safety net of primary and preventive care that does not consider immigration status.

The county-run program would give undocumented immigrants – and legal residents who can’t afford health insurance but don’t qualify for Medi-Cal – the ongoing opportunity to see a doctor, get tested and receive treatment before minor health problems become severe.

Funding would come from an estimated $700 million in county savings tied to expansion of the Medi-Cal program.

Senate President Pro Tem Darrell Steinberg said he strongly supports the concept of improved care for undocumented residents, which is pushed by officials of health care, labor and immigrant groups.

“I think that people who are living in this country, working hard and pursuing (citizenship) ought to be able to care for themselves and their loved ones,” he said.

Assembly Speaker John A. Pérez said he wants to ensure that counties have adequate funds to serve needy residents who lack health insurance but it’s premature to comment further until more is known about cost and number of people requiring care.

“There will always be a population that isn’t covered and there will always be an impact on counties. We need to make sure counties have the revenues and the resources to address those needs,” Pérez said.

Gov. Jerry Brown has taken no public position on expanding care to undocumented immigrants, but his budget proposal does not contemplate such a move and the federal government would not subsidize it, said Toby Douglas, director of the state Department of Health Care Services.

The Brown administration is focused instead on overhauling health care in a way that’s “affordable and sustainable,” Douglas said.

The issue of subsidizing care for undocumented immigrants is controversial politically and complicated by questions about who would bankroll it, competing spending priorities, future fiscal projections, and differing county-by-county needs, attitudes and demographics.

“This is a pivotal moment where decisions made the next several weeks will determine wether we’re fulfilling the promise of reform for all Californians,” said Anthony Wright, director of Health Access California, a nonprofit advocacy group that supports the move.

But Barbara Coe, of California Coalition for Immigration Reform, which advocates a crackdown on illegal immigration, characterized the health care plan as a slap in the face.

“It will hurt law-abiding citizens by taking money from them to fund the health care of criminals,” Coe said.

Senate Republican leader Bob Huff, of Diamond Bar said a key consideration would be whether the program would save money by reducing the number of people who show up at emergency rooms with severe problems and are treated at public expense. “That’s certainly not an efficient vehicle to deliver medical care,” he said.

Oday Guerrero, 23, an undocumented immigrant participating in a two-year federal program entitling her to live and work in the United States without fear of deportation, said she has heard horror stories of undocumented immigrants struggling to get care for cancer, diabetes, heart problems or other major threats.

“Everyone has the right to survive, and that’s essentially what this is about – survival,” she said.

Service Employees International Union, which represents 300,000 health care workers statewide, said in a written statement that “every California resident, regardless of documentation status or ability to pay, should have quality health coverage.”

Attempting to drum up public support for the concept, California Endowment, a private health care foundation, is bankrolling a multimillion-dollar TV ad campaign that includes undocumented immigrants questioning their access to care.

“Doesn’t it make more sense to keep us all healthy, instead of treating us after we get sick?,” the TV ad says.

Daniel Zingale, a senior vice president of California Endowment, said there is growing recognition that undocumented immigrants contribute to the state’s economy, workforce and social fabric.

As California’s Latino population grows, Zingale added, “there’s a recognition, I think, that it isn’t wise politics to scapegoat people on the basis of their immigration status.”

Hospitals are required to treat extremely ill or injured people who show up on their doorstep, with counties helping to subsidize that care. Some counties go much further, providing primary and preventive services for indigents regardless of their immigration status.

In recent years, 53 of 58 counties have taken advantage of federal subsidies to create a health care network called low income health programs, or LIHPs, to serve a different, narrower population of low-income Californians – legal residents who are single and childless.

Current clients of LIHPs will be eligible for Medi-Cal under the coming federal health care overhaul, meaning they no longer would use the network and their health care tab would be paid entirely by the federal government for three years. This will save counties about $1.4 billion, perhaps half of which is untouchable because of other public health mandates.

Rather than let the county-by-county networks die, advocates want to pump some of the counties’ Medi-Cal-related savings into them, perhaps $700 million, then use the LIHPs to serve about 1 million undocumented immigrants and an estimated 2 million legal residents who don’t or can’t afford to buy health insurance next year.

“(They’re) pretty much going to be an empty vessel that can be utilized to serve this unique population,” said Sen. Ricardo Lara, a Bell Gardens Democrat who chairs the Latino Legislative Caucus.

Brown has floated a different idea: using the windfall to subsidize child care by shifting that program from the state to counties.

Recognizing that the state faces higher Medi-Cal costs in coming years, when the federal government’s share of expansion falls from 100 percent to 90 percent, Brown wants to use the counties’ looming $700 million savings to reduce state obligations.

Even if Brown and legislative leaders ultimately reach agreement on expanding health care for undocumented immigrants, a key question is whether counties should be required to do so or simply offered fiscal incentives.

The California State Association of Counties has adopted a resolution supporting a strong safety net for people who lack medical insurance in coming years, but it has taken no position on the push to expand care for undocumented immigrants.


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