Affordable Care Act Provisions

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Are you thinking of avoiding the mandate to get insurance from Obamacare? Ultimately, it could hold some large costs for you in the long run. In order to ensure that people sign up for coverage, the Affordable Care Act has some complex penalties for those who choose to remain uninsured. These penalties may cost hundreds or thousands of dollars in the greater scheme of things. Around 6 million people may be hit with these fines by 2016, which would result in them having to pay $7 billion to the federal government in fines.

Uninsured adults will have to either pay a flat fee for themselves and their children or pay a share of their income, depending on which amount is greater. The penalty is pro-rated if people have coverage for part of the year. They also won’t be liable if they lack coverage for less than a period of three months during the year. Although the penalties are initially very small, they continue to grow as the years progress, with an eventual limit. They cannot exceed the national average premium for bronze coverage, which is the cheapest plan tier in state based exchanges.

In 2014, the flat fee is designated to be $95 per adult and $47.50 per child, up to $285 per family. The penalty could also be 1 percent of the family income, if that results in a larger fine. The income is defined as a total income above the filing threshold. This would be $10,000 for an individual and $20,000 for a family during 2013. Therefore, someone who makes around $50,0000 would have to pay a $400 penalty. A couple that is earning that amount would pay $300 each.

By the period of 2016, the flat fees would grow to $695 per adult and $337.50 per child. Alternatively, it could be 2.5 percent of the family income, depending on which amount is greater. At this point, the average premium for bronze coverage is expected to hit as much as $5000 for an individual and $12,500 for a family. Although this seems expensive, the goal is to use it to encourage people to want to be insured instead of giving them reasons to dread being uninsured. Most people would eventually find that it would be more affordable for them to participate in the insurance plan than to pay the uninsured penalties.

It is important to note that not everyone who is uninsured will be subject to the penalties. 80 percent of the 30 million Americans that are expected to lack coverage during 2016 would be exempt from the mandate based on information from the Congressional Budget Office. Those who would be exempted include Native Americans, undocumented immigrants, and those who earn too little to be able to file their tax returns. People who would have to pay more than 8 percent of their income for health insurance and poor adults who are living in states where Medicaid is not being expanded would not be subject to the penalty.