Beginning in 2014, unless you are covered by an exemption, you are required to maintain basic health insurance coverage (known as minimum essential coverage) for yourself and any of your dependents, or pay a shared responsibility payment (a penalty). The requirement to maintain coverage or pay a penalty is generally called the “individual mandate.”

The penalty is the lesser of: (i) the greater of a flat dollar amount or a percentage of your household income, or (ii) the national average premium for the lowest-level plan providing minimum essential coverage. You must make the shared responsibility payment when you file your federal income tax return. Married individuals who file a joint return for a tax year are jointly liable for any shared responsibility payment.

You can satisfy the minimum essential coverage standard (and not be subject to a penalty) if you and your dependent are enrolled in a qualified health plan offered by an Exchange, a qualified employer-sponsored plan (including a government plan), a government plan, such Medicare, Medicaid or CHIP (Children’s Health Insurance Program), or any other health coverage plan recognized as affording minimum essential coverage.

Note that minimum essential coverage does not include, workers compensation insurance, disability insurance, dental or vision benefits, long-term care benefits, and Medigap or MedSupp insurance.

If you are an exempt individual, such as a non-U.S. citizen, incarcerated individual, member of certain religious sects or health care sharing ministries or a member of an Indian tribe you will not be subject to the individual mandate. In addition, low income taxpayers, taxpayers for whom basic coverage is unaffordable and taxpayers who qualify under a hardship exemption are not required to maintain minimum essential coverage. Moreover, under the short coverage gap exception, any individual who doesn’t maintain minimum essential coverage for less than three consecutive months will not be subject to the penalty for failure to maintain coverage.

The above is a very simplified explanation of the individual mandate. Please contact KHA if you would like to discuss how this requirement will affect you and your family.