ACA Basics – Did You Know You Have A Penalty If You Don’t Sign Up?

“It’s an attack on your freedom!” “It’s a necessary evil to get people healthcare!”

No matter what your opinion on the Affordable Care Act’s individual mandate is – it is part of the law of the land and must be followed. The individual mandate is the part of the ACA that says a U.S. citizen must be covered by some kind of private health insurance or government healthcare plan, like Medicaid.

The logic behind the individual mandate is that young healthy people will pay into a plan, but not use all the money they put into it. These excess funds from younger policy holders are then used to cover the costs of older policy holders, who typically may need more healthcare services.

Penalties and Exemptions

People who choose not to buy or sign up for coverage could be financially penalized when they file their taxes with the IRS. Coverage includes Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), veteran’s health programs, employer plans, health exchange plans or a few plans that were grandfathered in.

The law isn’t iron-clad and does allow for some exemptions. These include people who belong to a religion that opposes health coverage, undocumented workers, those who are incarcerated, Native Americans, people who don’t make enough to file a tax return and workers who would have to pay more than eight percent of their income after employer contributions or tax credits.

The law also allows for people to apply for a hardship exemption. While this may seem like a loophole for people to exploit, hardship exemptions apply to people who are in a bad way. People who are homeless, recently evicted, victims of domestic violence, just experienced the death of a close family member, filed for bankruptcy or went through a natural disaster that caused significant damage to their home or property are all exempt from the mandate. Many other situations also apply and arguably, the least dire situation that could lead to a hardship exemption is getting a shut-off notice from a utility company.

Penalties for not being covered started applying in 2014 and were set at $95 per adult, $47.50 per child (under the age of 18) or one percent of family income, whichever is greater.  For 2015, the penalty is $325 per person,  $162.50 per child or 2% of yearly household income whichever is greater.  The penalties increase each year, being set at $695 per adult, $347.50 per child or 2.5 percent on family income for 2016 and beyond – adjusted for inflation.

What Temporary or Contract Workers Need to Know

Unemployed or temporary workers may be wondering… “Do I need health insurance if I’m only temping or not working at all?”

Well, that all depends on yearly income. If you don’t end up making $10,000 or your family doesn’t make at least $20,000 – then you don’t need to worry about a penalty. However, if you are unemployed or not working during the first part of the year, but then get a steady income; you may need to pick up insurance at that time.

The best way to find out is to go onto the website www.healthcare.gov and complete an application to see if you are exempt from the mandate.

The talent acquisition experts at CAREERXCHANGE® can help you with all of your questions on the Affordable Care Act, along with other services. Contact us today and we will be glad to assist you!

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