Health Care Bill Impacts: The Individual Mandate

Posted by Jill on June 14, 2010

Over the next two weeks, we’ll be taking an in-depth look at the health care bill and how it might impact your finances. First up is the new health insurance individual mandate.

Health Care Bill Individual Insurance Mandate

One of the most controversial provisions of the new healthcare bill is also the one that will have the largest impact on the state of the insurance industry. It could also have a financial impact on you if you do not currently carry insurance. It’s the healthcare mandate.

Beginning in 2014, all Americans will be required to carry some form of health insurance or pay a penalty for not doing so.

Health Insurance Mandate Penalties

How Much is the Penalty for No Health Insurance in 2014?

  • Beginning in 2014, those without insurance will pay the greater of $95 or 1% of income.
  • Starting in 2016, the penalties rise drastically, to the greater of $695 or 2.5% of income. These penalties apply to EACH family member without coverage, including children, to a maximum of $2085 per family – this basically means that you will pay the penalty for the first three uncovered family members.

Health Insurance Mandate Exceptions

You will be exempt from the individual mandate if one of the following applies to you:

  • Your income is below the poverty line.
  • The cheapest insurance policy you can purchase (on the open market or through an employer) would cost more than 8% of your income. This means that an American making $30,000 would be exempt if their insurance plan was more than $2400 per year, or $200 per month.

Individual Mandate Impacts

First and foremost, the Obama healthcare mandate provision is obviously meant to increase insurance coverage across the country. But there is a larger financial impact too: The healthcare bill forbids insurers from denying coverage based on pre-existing coverage, meaning their costs will likely increase. The individual mandate attempts to balance out those costs by adding people to the covered pool –namely the young and healthy, who are more likely to forgo insurance currently. By doing this, insurers should be able to keep their premiums at or near current levels.

If you currently have insurance, the health care reform bill individual mandate provision does not affect you at all. But if you or a family member has chosen or been forced to go without insurance, you will now face a penalty for the right to continue that choice. If you have been unable to afford insurance, you may be eligible for assistance or be able to find an affordable plan through the new health insurance exchanges.

Stay tuned for a closer look in our entire health care series, including:

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Comments to Health Care Bill Impacts: The Individual Mandate

  1. Most Colleges are requiring the students to have health insurance and will tack the cost of their “plan” onto the tuition bill until the student has proof of insurance from another source. The students “right” to be uninsured has been taken away, correct?


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