With the new Affordable Care Act in place, 2014 is the first year many Americans will have to either get health insurance or face a tax penalty. This is all so new and there is a lot of misinformation out there. Here are the answers to some common questions about the Affordable Care Act.
Q: What is the deadline to sign up for insurance under the Affordable Care Act?
A: Originally, the sign up date was March 31. However, the government is giving extra time to Americans who say that they had trouble enrolling in health plans through the federal insurance marketplace by the March 31 deadline. Consumers who begun the application process on HealthCare.gov, but did not finish, will have until about mid-April to ask for an extension.
Q: Do I really need to be insured?
A: As of Jan. 1, 2014, with the exemption of a few people, you must be insured or you’ll be liable for a tax penalty. That coverage can be supplied through your workplace, COBRA, public programs such as Medicare, Medicaid or the VA, or an individual policy that you purchase just as long as you have coverage.
Q: What is the penalty if I don’t get insurance?
A: The penalty is a maximum of either $95 or 1 percent of taxable income in 2014. Most people think $95 is not a big deal, but they fail to realize that if you have a moderate income, the 1 percent will be more sizable than $95. Even if you only have to pay the $95, that penalty is per adult in the household and $47.50 per child in the house. The flat rate caps out at $285, the 1 percent penalty caps out at $3,600 per individual and $11,000 for a family of four.
Q: Will the penalty go up as time goes on?
A: The tax penalty for remaining uninsured goes up substantially starting in 2015 when it’s $325 per adult and $162.50 per child, or 2 percent of your family’s income, whichever is greater. In 2016, the tax penalty is even higher: $695 per adult and $347.50 per child, or 2.5 percent of your family’s income, whichever is greater. As you can see, it’s probably not a good idea to wait.
Q: Does everyone in the home need to be insured?
A: Yes, even one uninsured family member can cost you a penalty. This includes any child that you claim as a dependent. Health insurance coverage you have in 2014 will be reported to the federal government. Health insurers, employers that sponsor health plans and agencies that administer government health plans will all have to file annual reports to the IRS divulging who is covered under their plans. The providers will also give the people they insure documentation as proof of coverage. In 2015, you will be required to report whether you and your family members had health insurance coverage on your tax forms.
Q: Are there any exemptions from the penalty?
A: There are lots of exemptions from the penalty. The biggest is for having income below the tax-filing threshold. This year that’s roughly $10,000 for a single person and $13,000 for a head of household. If you don’t have to file income taxes, you won’t have to pay the penalty. You can qualify for an exemption if the cheapest available insurance would cost more than 8 percent of your income.
Q: Will I go to jail if I don’t have health insurance?
A: You won’t go to jail for not paying the penalty; the government isn’t even allowed to garnish your wages. The IRS can, however, withhold your tax refund.
Q: If I pay the tax penalty will I be insured?
A: Paying the tax penalty does not make you insured. That ship has sailed. You need to apply before enrollment closes. You can still see a doctor or go to a hospital; you’ll just have to pay all the bills out of pocket.
Q: If I don’t have health insurance and I get sick or have to go to the emergency room what happened then?
A: You will be billed and responsible to pay it yourself. If you can’t pay those bills, the health care provider will collect.
What other questions do you have about getting insured under the Affordable Care Act? Ask us at email@example.com.