When the Affordable Care Act (ACA) first took effect, it included an “individual mandate.” This meant that if you did not have health insurance, you would be penalized. When you filed your tax return each year, you would have to send the federal government a penalty if you could not show you had health insurance.
While it was unpopular, it was seen as essential to the Obamacare plan, as it became known. It encouraged people to buy health insurance, increasing the size of the pool of insured people and the resources to fund the plan.
There were exceptions. The categories of those not required to buy health insurance included:
- those who could not find a plan that cost less than 8% of their income
- those with individual income below $10,150
- those who could prove that health insurance would present an unmanageable financial burden
- those who object on religious grounds
- prisoners
- American Indian tribal members
The health insurance penalty today
As of 2019, the individual mandate no longer applies. You won’t be penalized if you do not buy health insurance this year. However, you would have been penalized if you did not have health insurance in 2018.
That penalty would have been assessed on your tax return for 2018. If you had a refund coming, the penalty would be taken out of it. If you did not get a refund, you were required to mail the federal government a check. If you didn’t pay, the amount would be rolled over to the next tax year, although the law does not permit the government to garnish your earnings or do much else to collect it.
How much was it? In 2018, the penalty for being uninsured was 2.5% of your yearly household income, or $695 per person over 18, ($347.50 per child under 18), whichever was greater.
Some states still have their own individual health insurance mandate, including New Jersey, Massachusetts, Vermont and the District of Columbia. If you live in one of those states and don’t have a health insurance plan or an alternative (more on that below), you will have to pay a fee with your state taxes.
Wider options in health insurance
In addition to the removal of the individual mandate, today’s health insurance legislation opens up more options to individuals.
For example, you could choose a “catastrophic” plan to cover large health care expenses but not preventative care. Ironically, preventative care prevents a large number of catastrophic events, so this may be an option that costs you more in the long run.
Some plans allow you to opt out of coverage that you believe you will not need, such as mental health services or maternity care. Again, this may be counter-productive. Mental health issues are far more common than most people appreciate, and not predictable.
What’s more, when people opt out of certain benefits, it reduces the size of the “pool” of covered people, which may drive up the premiums for all — even those who opt out. It can reduce the effectiveness of the whole insurance plan, and can affect the health of the overall population.
Healthcare sharing plans
Another alternative that could save significantly on monthly premiums is a healthcare sharing plan. These are not insurance plans, but ways for members of a group to pool their money to pay for health care when members need it.
Typically run by faith groups, these plans were grandfathered into the original ACA. They sometimes require those who join to be members of a particular church, and do not cover services that may be counter to their beliefs. Most will cover basic health services, including doctor’s office visits, preventive and wellness care, emergency room services, hospital stays, surgery, diagnostic testing, maternity service sand specialist visits.
Confused? We can help.
Call us at Health Choice One to help you work out what’s the best health insurance plan for you and your family.