Countdown to Coverage: Have Questions about Fees?

Starting October 1, 2013 many Americans will have the opportunity to enroll in new affordable coverage options through the Health Insurance Marketplace.  With these new coverage opportunities, however, comes a new requirement that most individuals have health insurance in 2014, or pay a fee to go uninsured.  The prospect of paying a fee (or “penalty,” as it is also called) may sound intimidating, but we’re here with the good news that most people who have coverage today already meet this new requirement, and that not everyone will be subject to the fees in 2014 and beyond.  Learn more below!

What if I Already Have Insurance?  Will I Owe a Fee?fees and insurance image

In order to avoid paying a fee in 2014, an individual needs to have “minimum essential coverage.”  If you are enrolled in any of the following plans in 2014, you’ve already met this requirement and will not have to pay a fee:

  • Any Health Insurance Marketplace plan
  • Any individual insurance plan that you have today
  • Any employer plan (including COBRA and retiree plans)
  • Medicare
  • Medicaid
  • Children’s Health Insurance Program (CHIP)
  • TRICARE
  • Veterans health care programs (including the Veterans Health Care Program, VA Civilian Health and Medical Program, and Spina Bifida Health Care Benefits Program)
  • Peace Corps Volunteer plans

Other plans may also qualify, so be sure to ask your health insurance provider if your plan meets the minimum essential coverage standard.

So, what doesn’t qualify as minimum essential coverage in 2014?  Plans that only cover vision, dental care, or a specific medical condition do not qualify, nor does workers’ compensation or plans that only offer discounts on medical services, for example.  Individuals who are only covered by these limited policies might consider purchasing more comprehensive coverage for 2014, or pay a fee.

What if I am Uninsured?  Who Doesn’t Have to Pay a Fee?

There are a variety of groups that won’t be responsible for paying a fee, even if they remain uninsured:

  • Individuals uninsured for a single period of less than three months
  • Low-income people for whom insurance would cost more than 8% of household income, after taking into account employer contributions or federal tax credits
  • People not required to file a tax return because their annual income is too low (about $10,000 for a single adult in 2013)
  • People who would qualify under the new federal income limits for Medicaid, but their state has chosen not to expand Medicaid eligibility
  • Members of a federally recognized Indian tribe
  • Participants in a health care sharing ministry
  • Members of a recognized religious sect with religious objections to health insurance
  • Individuals who are incarcerated
  • Non-U.S. citizens and nationals who are not lawfully present in the U.S.,

If you don’t fall into any of the categories above, you can still apply for an additional hardship exemption in the Health Insurance Marketplace.

How Much is the Fee and How Do I Pay It?

If you don’t enroll in minimum essential coverage for 2014, and you don’t fall into one of the exempt categories listed above, you may be responsible for paying a fee.

In the year 2014, an individual or family would be responsible for $95 per adult, $47.50 per child (up to $285 for a family), or 1% of income (whichever is greater).

The fees increase in 2015 and rise significantly in 2016 to $695 per adult, $347.50 per child (up to $2,085 for a family), or 2.5% of income (whichever is greater).

The fee will be pro-rated according to the number of months the individual or family goes without insurance, and will be assessed as part of the household income tax return for that year.

Please keep in mind that individuals and families who choose to pay the fee (rather than buy coverage) will also be responsible for covering all of their health care costs in a given year, and will not have the protections of health insurance to shield them from high medical bills.

Where Do I Go From Here?

If you are uninsured and want to purchase minimum essential coverage for 2014, go to www.HealthCare.gov on October 1, 2013 to check out policies available in the new Health Insurance Marketplace.  Enroll early to make sure that you and your family get the coverage you need and avoid paying a fee in 2014.

By Megan Randall, Center for Public Policy Priorities. Cross-posted from Better Texas Blog.

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