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Ready, Set, Gobamacare

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You still don’t have health insurance? – don’t panic (yet).

There are only five days left to enroll in Affordable Care Act (ACA) health plans for coverage beginning January 1st. The December 23rd deadline includes small businesses participating in the Small Business Health Options Program (SHOP).

But the truth is that December is not the last month to apply for health coverage through the exchange. Individuals who are not able to apply by December 23rd (or pay by January 6th) can apply through the end of open enrollment on March 31st 2013. And small employer groups participating in the Small Business Health Options Program (SHOP) can apply year-round.

While the pro-rated tax penalties begin in the 2014 tax year, the good news is that there is no penalty for a single gap in coverage of up to 3 months in a year; which is why open enrollment has been extended to March 31st. Keep in mind that you’d have to be insured by March 31 to avoid all penalties, which means you’ll want to apply before Feb 15th.

What are the penalties?

The fee for not having insurance in 2014 is $95 per adult and $47.50 per child or 1% of your taxable income (up to $285 for a family), whichever is greater.  But the fees escalate sharply after 2014

2015 = $325 per person per year or 2% of your Income (whichever is greater)
2016 = $695 per person per year or 2.5% of your Income (whichever is greater).
2017 = Tax Penalty will increase by the rate of inflation going forward, or 2.5% of your Income (whichever is greater).

  • The penalty is based on modified adjusted gross income.
  • The maximum penalty per family is capped at no more than 300% of the minimum penalty (e.g. $695 x 300% = $2,085)
  • Children under 18 are assessed at 50% of the minimum penalty.

What about tax penalties for businesses?

See our Health Care Reform Guide for more information on the employer tax penalty for employers with over 50 full-time equivalent employees. Those with less than 25 full-time equivalent employees can get tax subsidies of up to 50% of their costs of employee premiums.

Can I get a subsidy?

Obamacare subsidies are given as refundable tax credits and are available for those with incomes between 139% to 400% of the FPL (federal poverty level). The FPL changes each year and, for a family of four, is currently $23,050 (139% FPL) to $92,200 (400% FPL). Those within this bracket will be eligible for subsidies, although those on the higher end will receive considerably less assistance. But keep this in mind – subsidies are only offered to those who purchase insurance through the marketplace.

Are there any exceptions or those who are exempt?

There are a handful of groups which are exempt from the requirement to obtain coverage or pay the penalty, including:

  1. People who would have to pay more than 8 percent of their household income for health insurance
  2. People with incomes below the threshold required for filing taxes (in 2012, $9,750 for a single person and $27,100 for a married couple with two children)
  3. People who qualify for religious exemptions
  4. Undocumented immigrants
  5. People who are incarcerated
  6. Members of Native American tribes

Is there any way around Obamacare?

Yes, you can purchase a plan outside of the exchange/marketplace, directly through a carrier or with the help of an agent like myself (at no cost to you). There are numerous advantages to this, including better networks (read more).

There is another work around which may fit some families quite well. It’s incredibly affordable, and the topic of my next post – so stay tuned!

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