Will you be penalized if you don't have health insurance in 2014?

April 18, 2012

The individual mandate is among the most controversial parts of federal health care reform. The rule requires almost everyone to have health insurance starting in 2014 or pay a tax penalty.

So what are the chances that you'll be penalized? Fairly slim, as it turns out.

Among people under 65, about nine out of 10 will either automatically comply with the individual mandate because they will already have health insurance, or they will be exempt from the mandate, according to a Kaiser Family Foundation analysis.

The Kaiser Family Foundation examined how the individual mandate would impact people at various income levels, based on simulations prepared by Jonathan Gruber, a Massachusetts Institute of Technology economics professor and an architect of state health care reform in Massachusetts.

Here's what the researchers found:

  • Almost everyone 65 and older would comply with the mandate automatically because they are eligible for Medicare.
  • Of those under 65, 80 percent would comply automatically because they would have coverage through government health insurance programs, individual health insurance and employer-sponsored health coverage.
  • About 40 percent of people without health insurance would be exempt. Undocumented immigrants, Native American tribes, prison inmates and members of certain religious groups are automatically exempt. Other people who would be exempt are those whose incomes are so low they don't have to file taxes, and those who would have to spend more than 8 percent of their household income on health insurance.

Kaiser examined how the mandate would affect a family of four -- two parents and two kids. Kaiser found that the family would qualify for Medicaid, the federal-state insurance program, or substantial federal subsidies to help them buy health insurance if their income was below $61,000. They would be exempt from the mandate if their income was between $61,000 and $150,000 because they would have to spend more than 8 percent of their income on insurance coverage.

Only if they made $150,000 or more would the family be subject to the mandate and not qualify for any federal financial assistance for health insurance.

Of course, all this depends on whether the mandate will survive legal challenges. The U.S. Supreme Court is expected to rule in June on whether the mandate and some other portions of the federal Patient Protection and Affordable Care Act are constitutional. If the mandate is overturned, it's unclear how much of the federal health care reform law will remain intact.

Barbara Marquand

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