Enforcement and Penalties in the Affordable Care Act.

Healthcare Reform School - Lesson #6 - Enforcement of the Patient Protection and Affordable Care Act.

In this session I will cover the basics of how the Federal government will enforce the law and the penalties that have been published as punishment for non-compliance.

To get started, the basic premise of the law is that everyone must have major medical health insurance and the insurance companies can not deny coverage to anyone that applies for major medical health insurance.  The people will be able to purchase health insurance from on-line exchanges, through which private insurance companies will sell their policies.  The policies have minimum requirements in terms of coverage, with the least expensive being labelled Bronze, then Silver, then Gold, then Platinum.  They get more expensive and have less financial exposure as you go up the ladder.  I explain this because this, because this will come into play when going over the penalties for not having insurance.

The law states that everyone is supposed to purchase insurance and people under a specific income level will receive assistance in paying for it.  But what happens to those who decide not to comply at all?  Here is the break down.

Salvatore Vuono, courtesy FreeDigitalPhotos.net

1. It is not considered a criminal offense.
2. The penalties are financial fines and will be taken from tax refunds in the subsequent years.  The penalties start out small in 2014 and increase each year until 2016.  Following are the penalty amounts.
1. In 2014 - $95 per adult, $47.50 per dependent. (up to $285 for a family) or 1.0% of income, whichever is greater
2. In 2015 - $325 per adult and $162.50 per dependent. (up to $975 for a family) or 2.0% of income, whichever is greater
3. 2016 and beyond - $695 per adult and $347.50 per dependent (up to $2,085 for a family) or 2.5% of income, whichever is greater.
3. There is an exception to the federal requirement to buy health insurance.  
1. If you have to pay more than 8% of your income for health insurance, after taking into account any employer contributions or tax credits 
2. According to the price of the Bronze Plan (Mentioned above)
3. There is no penalty for being without insurance

All of this being said, I personally do not recommend going without health insurance, and not just because I am an Insurance Agent/Broker.  The cost of medical care is very high and insurance can save your assets in case of a catastrophe.

Lesson #7 will be coming soon.

Previous Lessons have been:
Lesson #1 - Introduction
Lesson #2 - Basic Reason for creating the Patient Protection and Affordable Care Act
Lesson #3 - Public exchanges for Purchasing Insurance
Lesson #4 - Essential Health Benefits that will be added to all Health Insurance policies in 2014
Lesson #5 - Tax Credits to Help Pay for Health Insurance