Frequently Asked Questions Requiring individuals to buy insurance

1. Why is there a mandate that everyone buy health insurance?

2. What if I don't have insurance?

1. Why is there a mandate that everyone buy health insurance?
The health care law includes what is called an individual mandate that requires everyone — whether they are young, healthy, older or sicker — to have health insurance. There is also a provision that requires health insurance companies to accept everyone for coverage regardless of their health status. Both of these provisions start on Jan. 1, 2014.

The mandate is a vital part of expanding access to health care, because it spreads the risks and costs of providing health insurance to everyone. With the mandate in place, health insurance companies will provide coverage to healthy people who use fewer health care services, as well as unhealthy and older people who use more health care services and are consequently more expensive to insure.

There are some exceptions to the individual mandate. You may qualify for an exemption if:

  • You are a member of a Native American tribe
  • You are incarcerated
  • You are part of a religion that objects to health insurance
  • You are an undocumented immigrant
  • Your income is below the threshold that requires you to file a federal income tax return
  • You would have to pay more than 8 percent of your income on your health insurance (this is after applying any employer contributions or tax credits)

2. What if I don't have insurance?
The mandate takes effect January 1, 2014. After that time, the government will impose a financial penalty each year if you do not have health insurance coverage. You will pay penalties for each uninsured adult and child in your family up to a certain maximum. The penalty amount for children under the age of 18 is half the amount adults will pay. The penalties for not having health insurance increase over the next few years. If you have no insurance, you will be charged the greater of these penalty amounts:

  • 2014 penalty — $95 per individual and $47.50 per child (up to a maximum of $285 per family) OR 1 percent of your income
  • 2015 penalty — $325 and $162.50 per child (up to a maximum of $975 per family) OR 2 percent of your income
  • 2016 penalty — $695 and $347.50 per child (up to a maximum of $2,085 per family) OR 2.5 percent of your income

After 2016, these amounts will increase based on cost-of-living adjustments. The Internal Revenue Service will assess these penalties when you file your annual income tax returns.