Obamacare Help: Fees And Exemptions For Not Having Health Insurance
A poor start to the Healthcare Marketplace is leaving would-be insurance applicants with lukewarm attitudes towards the new healthcare policy. Website capacity (traffic reaching 250,000 in the first week — four to five times more than projected) and errors that delayed or crashed a person's application made for woefully low enrollment figures for the Marketplace's first two months of operation.
The clock counting down to the March 31, 2014 deadline is still working fine though, by when all persons are expected to:
- Have a Qualified Health Plan (as defined by the Affordable Care Act)
- Make an "Individual Shared Responsibility Payment" for not having health insurance (Marketplace or otherwise)
- Apply for an exemption to the fees
Persons are encouraged to try (or retry) using the regularly updated website or use alternate Marketplace channels to acquire insurance — which can be found in my step-by-step Marketplace registering guide.
If you'd like to know more about these "no coverage" fees and how to obtain exemptions to them, this article covers:
- The Fees (a.k.a. — the "Individual Shared Responsibility Payment")
- Exemptions (including "Qualifying Life Events")
- Ways to Apply For Exemptions
- Bonus: What is (and isn't) a Qualified Health Plan
By no means is this a "how-to" for getting out of paying. If you've read my other Healthcare Marketplace pieces — I'm not advocating one side of the "Obamacare" argument or other, just trying to help people navigate it (it seems to be here to stay, like it or not). The fees and exemptions to them herein can all be found on the Marketplace site, you just don't have to go fishing for them now.
The purpose of the "Individual Shared Responsibility Payment" is to discourage people from continuing without a form of health insurance in the United States. A damagingly-expensive practice of using emergency rooms in leu of medical insurance has led to increased costs for insured patients.
According to Blue Shield of California, uninsured ER visits add nearly $1,200 in annual expenses to insured families in the state.
Due in part to how expensive ER care is ($321 for ER strep throat treatment versus $91 at a general California practitioner), this is also due to uninsured patients not paying their costs.
Typically, what occurs is that the hospital collects a fraction of the bill (often only what the patient can pay), then the government covers another fraction, and the remaining enormity of the bill is split among insured patients. The fees are an attempt to discourage the behavior.
Beginning March 31 next year, uninsured persons will either be charged $95/adult in a family ($47.50 for children under 18) or 1-percent of their annual income — whatever will cost more.
If you fall into the 1-percent group, your fee will not exceed the cost of a typical "bronze tier" Marketplace insurance plan (this means certain people will actually pay as much as insurance would have cost them anyway).
In 2015, the fees increase to $325/adult or 2-percent of your yearly income. In 2016: 2.5-percent or $695/adult. They'll keep getting heftier every year.
Additionally, you're required to pay the full costs of your healthcare as well as the fee (without protection from skyrocketing costs that have driven many people into bankruptcy). If you're uninsured for only part of a year, you pay 1/12th of the fees for every month you weren't covered — unless you were only uninsured for three months or less (more of that in Exemptions).
Paying the fees for a year are filed with your taxes in April of the next year.
TIP: Failure to pay your fees will result in the IRS withholding their sum from your future refunds, but no liens, levies, or criminal action of any kind will be taken against you.
Exemptions to the "Shared Individual Responsibility Payment" are split into two types: "exemptions" and "hardship exemptions" — circumstances where the government excuses you from healthcare responsibilities (because basically, you have bigger problems that year).
Standard Exemptions —
- Being uninsured for less than three months of a year (the first three months, before the end on an enrollment period in March, before filing taxes and fees in April)
- The cheapest plan available to you still costs more than 8-percent of your annual income
- You don't file tax returns because your income is too low
- You're a member of a Federally recognized tribe and eligible for an Indian Health Service Provider
- You're a member of a Federally recognized Healthcare Sharing Ministry
- You belong to a religious sect that objects to insurance (in all forms: social security, Medicare, etc)
- You're incarcerated and not awaiting the disposition of charges against you
- You're not legally present in the U.S.
Hardship Exemptions —
- You are homeless
- You've been evicted/foreclosed on/facing either process within a six-month period
- You've received a shut-off notice from a utilities company
- You've been the victim of domestic violence
- You've recently experienced the death of a close family member
- You've been the recent victim of a fire, flood, or other natural disaster/human action that was substantially damaging
- You've filed for bankruptcy within a six-month period
- You've incurred medical costs you couldn't pay within a 24-month period
- You've experienced unexpected increases in your necessary expenses while caring for an ill/disabled/aging family member
- You're expected to claim a child as a tax-dependent because they were denied for Medicaid or C.H.I.P. (and the court ordered someone must support the child) — this exempts you from paying the fee for the child
- Trough appeal, you become eligible for 1) enrolling in a Healthcare Marketplace plan, 2) lower monthly premiums, or 3) lower out-of-pocket costs that were otherwise preventing you from obtaining healthcare
- You're found ineligible for Medicaid (presumably unable to afford a Marketplace plan either) because your state did not expand its Medicaid eligibility under the Affordable Care Act
Qualifying Life Events —
Should you not enroll in a new Qualified Healthcare Plan (Marketplace, Medicare/Medicaid, etc) by the end of an enrollment period, you cannot sign up for insurance until the next enrollment period.
Unless one of these has occurred to you:
- You've moved to a new state
- "Certain changes in Income" (this wasn't elaborated to on the Marketplace site, calling 1-800-378-2596 may be necessary to determine your eligibility)
- Your family-size changes (death or birth)
Ways to Apply For Exemptions:
There are multiple ways to apply for these exemptions (sometimes the exemption-type dictates your choices).
If applying to be exempt based on —
- Coverage being too costly for you (the 8-percent of income stipulation)
- Membership in a Healthcare Sharing Ministry
- Membership in a Federally Recognized Tribe
- Being incarcerated (and not awaiting disposition of charges against you)
— you can claim these exemptions when filing your tax returns or when applying to the Healthcare Marketplace.
Applying for an exemption because of —
- Membership in a recognized religious-sect that objects to insurance
- Eligibility for services through an Indian Healthcare Provider
— these exemptions can only be claimed through the Marketplace (not taxes).
If you're exempt because your income is too low to tax, there is no need to apply for this exemption. Because there's no tax-filings on your record, you're essentially invisible to the issue.
Even if you file a return for the purpose of obtaining a refund from a withheld paycheck, you're still not required to pay the "Shared Individual Responsibility Payment".
TIP: If unemployed and wonder if you are exempt from purchasing insurance or paying fees, visit the Marketplace site. Exemption due to unemployment is determined case-by-case — and filling out an application or calling the Marketplace phone number are the only ways to be sure.
What Is (And Isn't) a Qualified Health Plan:
Qualified Health Plans are any insurance plan the government recognizes for meeting minimum coverage requirements (as per the A.C.A.). Details on these minimum requirements can be found in my hub on selecting a Marketplace insurance policy (but the short of it is — anything in the Marketplace and forms of government-aid healthcare).
Qualified Plans —
- Individual Policies (that meet the minimum coverage requirement)
- Job-based policies (that do the same)
- Medicare and Medicaid
- C.H.I.P. (Children's Health Insurance Program)
- TRICARE (military-serviceperson insurance)
- Veterans Benefits
- Peace Corp Volunteer plans
- Spina Bifida Healthcare Benefits Program
- Self-funded healthcare plans offered to students by their university (that take effect before the March 31 deadline)
Plans That DO NOT Qualify —
- Plans for dental or vision only
- Workers Compensation
- Coverage for only specific diseases and conditions (I'm not sure why the Spina Bifida-plan escapes this chopping block, but that may have to do with the extent of services covered by it for treating that condition)
- Plans that only offer discounts on medical services
After the enrollment deadline, the only options left to you are applying for exemptions that can be filed with your taxes – or paying the fees for being uninsured.
Having a better idea now (hopefully) of what the "Individual Shared Responsibility Payment" fees are as well as how you may be exempt from them — you have until March 31, 2014 to either obtain a form of approved health insurance or apply for exemptions within the Marketplace.