Posted: July 5th, 2021
The Affordable Care Act is essential legislation in the health care reform law that ensures the American citizens acquire health insurance, have improved and easy access to health care at reduced costs. It is the mandate of every citizen to take up and maintain qualifying health coverage for themselves as well as their dependents. Failure to that, various penalties for noncompliance are accorded in reference to the Internal Revenue Code (HealthCare.gov, 2018). Thus, the assignment discusses the Individual Mandate in detail as well as the penalties for lacking health insurance. Secondly, the eligibility criteria for exemptions are outlined, and finally, a proposal on policy enhancement to ensure the increased success of the Individual Mandate is discussed.
Individual Mandate is the legal requirement of citizens to obtain or purchase a service, and in this case, the ACA health insurance. Individual Mandate in ACA, therefore, requires that either all-American citizens buy health insurance or they pay a tax or fee if they choose not to purchase it. This legal mandate requires that they buy the minimum essential coverage, which includes the following but not limited to coverages such as CHIP, employer-sponsored, and Medicaid, health plans such as the BHP and expatriate and other insurance recognizable to the Secretary of HHS (HealthCare.gov, 2018). This fee is referred to as the Individual Shared Responsibility Payment or the Individual Mandate tax. This fee was established to increase the purchase of health insurance and to facilitate penalties for not purchasing health insurance. The penalty is supposed to be paid while one files their federal taxes making it a federal or state tax. This Individual Mandate Tax is eligible until FY 2018, when the American citizens will present their 2018 tax returns in April 2019.
The penalty, as seen above, is due to noncompliance with the Individual Mandate or simply the legal requirement. Calculating one’s penalty can be achieved in two ways, namely the percentage and per person methods. When using the percentage method, the essential element includes one’s household income that is above your tax filing requirements, such as $12,000 for single individuals and $24,000 for individuals that are married and file jointly. Therefore, 2.5% of one’s annual household income will form the Individual Shared Responsibility Payment (Jost, 2017). On the other hand, when using the per-person method, the amount would be fixed to $272, and a household with five or more family members would pay $1,360 (FY 2017) (Jost, 2017). In the next year, which is 2018, the income percentage method remains the same, which is 2.5% of the household income. However, in 2018, while filling the tax returns, when using the per-person method, they have to pay per person fees plus any inflation adjustments.
The Federal government, through the HHS, wishes to make its population insured; however, the primary challenge is seen when they try to make the health insurance plans more affordable without increasing its financial spending. It is for this reason that still a substantial population of about 17.8% remains uninsured. In some research carried out, many American citizens do not realize that purchasing ACA health plans would cost less than paying the Individual Mandate Tax due to the lack of coverage (HealthCare.gov, 2018). There is a group of people exempted from the fees or penalties, meaning that if an individual acquires an exemption, they cannot pay the Individual Shared Responsibility Payment at all. To qualify to acquire the exclusion, there are various requirements one must meet (HealthCare.gov, 2018).
These exemptions depend on the number of circumstances, financial status, and membership status, among others. Moreover, when one acquires the exception, they have to notify the IRS of the information while filing the tax returns. These exemptions include hardships, living outside the country, filing threshold, coverage gap, affordability, unlawful residency, incarceration, Indian Tribe Membership, and religious conscience (HealthCare.gov, 2018).
|Hardships||It involves an individual, who is homeless, faces eviction, experienced instances such as domestic violence, death, natural disaster, and bankruptcy, among others.|
|Living abroad||A bona fide resident and an individual living abroad for more than 330 days within a year qualify to fill the living abroad exemption|
|Filing threshold||An individual with less income than the filing threshold indicated in the federal income taxes|
|Coverage gap||An individual without the coverage in the first three months in the coverage gap in a calendar year|
|Affordability||An individual’s self-coverage exceeds 8.16%of household income|
|Unlawful residency||An individual that resides or is in the USA illegally or unlawfully|
|Incarceration||Imprisoned individuals are exempt. However, an individual with pending dispositions on their previous charges do not qualify to acquire the incarceration exemption|
|Indian Tribe Membership||All individuals recognized by the USA of Indians descent and are eligible for the special program qualify to acquire this exemption|
|Religious conscience||An individual must be a documented member of recognized religious divisions that are recognized by the IRC and shows opposition to accepting any benefits health care insurance included.
This includes the Healthcare Sharing Ministry organization, which is recognized by the IRC to be tax-free.
In addition, Americans can seek subsidies to offset their premiums. Among the 17.8% uninsured population, not everyone is eligible. However, they have to meet various requirements, as outlined below (HealthCare.gov, 2018).
As discussed above, the Individual Mandate policy seizes to be effective as from the FY 2020, however, a policy change and proposal recommendation that would ensure the success of the policy would be establishing a coherent and conclusive package. This conclusive package would be implementing the Individual Mandate; reforms that ensure Americans acquire affordable and accessible health insurance and expanded eligibility to federal subsidies (Jost, 2017). This is because affordable health care should be available to all citizens, and imposing the fee would be pushing the 17.8% of the uninsured population to take up the insurance coverage. As seen above, it is easier to purchase a health insurance package than paying the Individual Shared Responsibility Payment. Thus, the government should introduce this penalty along with providing more affordable health insurance options as well as expanded eligibility in acquiring the subsidies (HealthCare.gov, 2018). Since the citizens know the high costs incurred in paying the penalty, they most likely will purchase the health insurance plans, which is a win-win situation for all involved parties.
Individual Mandate in ACA requires that either all-American citizens purchase health insurance or they pay a tax or fee if they choose not to purchase it. This fee is referred to as the Individual Shared Responsibility Payment or the Individual Mandate tax. The penalty, as seen above, is due to noncompliance with the Individual Mandate or simply the legal requirement. Calculating one’s penalty can be achieved in two ways, namely the percentage and per person methods. There are exemption eligibility criteria for various groups. These exemptions include hardships, living outside the country, filing threshold, coverage gap, affordability, unlawful residency, incarceration, Indian Tribe Membership, and religious conscience. A policy change and proposal recommendation would be establishing a coherent and conclusive package. This conclusive package would involve setting the Individual Mandate, reforms that ensure Americans acquire affordable and accessible health insurance and expanding eligibility to federal subsidies.
HealthCare.gov. (2018). The fee for not having health insurance: No health insurance? See if you’ll owe a fee. Retrieved from https://www.healthcare.gov/health-coverage-exemptions/2019-exemptions-catastrophic-coverage/
Jost, T. (2017, August 21). The IRS Is Still Enforcing The Individual Mandate, Despite What Many Taxpayers Believe. Retrieved from Health Affairs: https://www.healthaffairs.org/do/10.1377/hblog20170821.061615/full/
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