What are the penalties for most Americans that do not enroll in health insurance?

The penalties for year two will be more than three times what they are in year one. In year one, the penalty for not enrolling in health insurance (excluding those with exemptions) was $95 per adult and $47.50 per child OR 1% of modified adjusted gross income, whichever is higher. The penalty for year two will be $325 per adult and $162.50 per children OR 2% of modified adjusted gross income, whichever is higher. The maximum penalty for families will be $975 OR 2% of modified adjusted gross income, whichever is higher.

So who is exempt from having to pay the penalty?

For any penalty, there has to be a way to get out of paying it. Fortunately, the healthcare law provides such ways. 

• If you have health insurance that complies with Obamacare standards and mandates, you are exempt. 

• If you are currently enrolled in a government-funded program like Medicare or Medicaid, you are exempt. 

• If you are an illegal immigrant, you are exempt. 

• If you are in prison, you are exempt.

• If you live in a United States territory, you are exempt. 

• If your modified adjusted gross income is lower than 100% of federal poverty level, you are exempt. 

• If you live in a state that did not expand Medicaid to adults, you are exempt if your income is less than 138% of federal poverty level. 

• If you experienced a financial hardship in 2014, you are exempt.

• If the lowest priced health insurance plan available to you is greater than 8% of your income, you are exempt. 

• If you consider the marketplace plans unaffordable AND your prior health plan was cancelled, you are exempt. 

• If you are a member of a Native American Tribe, you are exempt. 

• If you are insured under a health care sharing ministry, you are exempt. 

• If you are uninsured for less than 3 months throughout the year, you are exempt. 

• If you are a member of a religious sect that objects to insurance, you are exempt. 

There is one other exemption that is excessively vague in its terminology. A hardship exemption includes many different financial occurrences from eviction to natural disaster to bankruptcy. The last exemption includes “experiencing another hardship in obtaining health insurance.” There is no further explanation. This lends itself to ambiguity and the possibility of millions of people claiming “another hardship” as a way to get out of paying the penalty.

All in all, the penalty will be adjusted just as we have seen throughout the course of Obamacare. There is no telling how this will play out, but as it stands today, these are the facts. Decide for yourself before February 15th if you want to enroll or not, or risk being uninsured until 2016.

We could provide the facts of the second enrollment season by giving dates, penalties, etc. Less interesting but very useful.

Now that insurance companies, brokerages, agents, and even the government have begun preparing for the 2014-2015 open enrollment season, clarity continues to lack, and the administration of the healthcare law remains highly suspect. While we do not know where the law will take us over the next few years, there are many concrete (albeit still wet) deadlines, timelines, and penalties to ponder when considering health insurance right now. 

So what are the timelines?

Over the past 4 months, I have had many people call me and tell me they would like to “look at Obamacare” for their families. After a few questions, I regretfully inform them that they must wait until open enrollment begins. Since the Affordable Care Act, for all intents and purposes, vetoed underwriting from health insurance, insurance companies decided that they could no longer accept individuals during all times of the year due to the possibility of enrollees signing the day they get sick and cancelling immediately after recovery. Hence, enrollment seasons were born. Now that the federal government had mandated specific time periods for enrolling in health insurance, you cannot purchase health insurance outside of those enrollment periods unless you qualify for a “special enrollment event.” Special enrollment periods can occur at any time of the year for a few life events such as marriage, birth of a child, divorce, adoption, significant change in income, moving to a new service, and a few others. If you qualify for a special enrollment, your situation is just like enrolling during open enrollment.

However, if you do not have health insurance, and you do not qualify for a special enrollment event, then you must wait until November 15th to sign up for health insurance. The open enrollment period for 2014-2015 begins on November 15th, 2014 and ends February 15th, 2015 (barring changes to federal law). This is the three month window that most Americans must make their purchasing decisions. 

Health insurance will begin on January 1st for all applications submitted between November 15th and December 15th (again, barring federal changes). 

Any application submitted between December 16th and January 15th will have an effective date of February 1st.

Any application submitted after January 15th, but before February 15th will have an effective date of March 1st. 

Now, we must take these deadlines with a grain of salt. During the initial enrollment period, originally thought to last from October 1st, 2013– March 31st, 2014,  we experienced many changes throughout. For example, enrollments after December 15th were originally unable to secure a January 1st, 2014 effective date until the President used his “pen and phone” to push that date back one week to December 23rd. Moreover, the initial enrollment period, by law, was supposed to end March 31st, 2014. It’s no secret that date was pushed back 2 weeks to April 15th, 2014.

There will undoubtedly be changes to this year’s enrollment season, but as it stands today, the enrollment season will begin November 15th, and it will end February 15th.

An understandable and comprehensive look at the Affordable Care Act contributed by Jay Claborn, The Claborn Agency, Inc. Lubbock, Tex.