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Not insured? Will pay penalty starting in 2014comment (0)

August 8, 2013

By Sondra Washington and Jennifer Davis Rash

Beginning in 2014, people who can afford health insurance and do not have what is being called “minimum essential coverage” may have to pay a fee on their federal income tax for that year. This type of coverage includes  “individual market policies, job-based coverage, Medicare, Medicaid, CHIP (the Children’s Health Insurance Program), TRICARE (for active military personnel, veterans and veteran families) and certain other coverage.”

“The fee in 2014 is 1 percent of your yearly income or $95 per person for the year, whichever is higher,” according to www.healthcare.gov. “The fee increases every year. In 2016, it is 2.5 percent of income or $695 per person, whichever is higher. In 2014, the fee for uninsured children is $47.50 per child. The most a family would have to pay in 2014 is $285.”

An individual or family who has to pay the fee will have to pay 100 percent of their medical care costs and will have to wait until the next year’s enrollment period to sign up for health insurance “unless they have a qualifying life event” like moving to a new state or changing income or family size.

The motivation behind this change in the Affordable Care Act is the high cost of health care for uninsured people and its affect on others, reports indicate.

“When an uninsured person requires urgent — often expensive — medical care but doesn’t pay the bill, everyone else ends up paying the price,” www.healthcare.gov states. “That’s why the health care law requires all people who can afford it to take responsibility for their own health insurance by getting coverage or paying a penalty.”

And while health insurance costs historically have been too far out of reach for those making at or below the poverty level, the insurance options coming on the Marketplace exchange are supposed to be affordable.

The Center for Rural Affairs (CFRA) reports that anyone making $45,960 — which is 400 percent of the poverty level, $11,490 — or less will benefit from the reduced rate.

“If you are below 400 percent of poverty ($94,000 for a family of four), the maximum you will pay for your health insurance is 9.5 percent of your income,” reported CFRA in a July 23 release. “The rest will be paid by a federal subsidy.” 

According to the latest U.S. Census report, 17.6 percent of Alabamians live below the poverty level and the median household income is $42,934.


According to www.healthcare.gov, “Uninsured people won’t have to pay a fee if they are uninsured for less than three months of the year, have very low income and coverage is considered unaffordable, are not required to file a tax return because their income is too low, would qualify under the new income limits for Medicaid but their state has chosen not to expand Medicaid eligibility, are a member of a federally recognized Indian tribe, participate in a health care sharing ministry or are a member of a recognized religious sect with religious objections to health insurance.”

Shane Spees, president and chief executive officer of Birmingham’s Baptist Health System, is urging Alabamians to take another look at the Medicaid situation in the state.

“The biggest lack of understanding is around the Medicaid program and expansion of that,” Spees said. “There’s a much bigger picture to see.

“Medicaid is the vehicle that will provide the most coverage for Alabama, not the (Marketplace) exchange. The expansion of Medicaid will have a positive ripple effect on the local economy as well as the state economy.”

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