Years ago, I never gave health care coverage a thought. I signed up for whatever plan my employer provided, and every week or so, payroll deducted the amount of the premium from my paycheck.
Only when I used the insurance did I actually find out whether it was any good. One year I needed a stress test. When I gave the receptionist my insurance card, she looked at me as if my hair were on fire. "I've never heard of this insurance company before," she said. I took the test and paid $700 out of my own pocket.
These days, I buy my own insurance through the health insurance marketplace set up by the Affordable Care Act. The other day during open enrollment, I upgraded to a "silver" plan from last year's "bronze." The new plan is affordable — even without the premium tax credit — and it covers what ails me.
What makes the ACA work? Under the act, the federal and state governments, insurance companies and employers are obligated to make health coverage both available and affordable. At the plan's heart, is the individual shared responsibility provision, which is based on the idea that it takes the individual participation of everyone to make health care more affordable overall. What is this provision, and what does it do? We have all the answers for you.
10: What is the individual shared responsibility provision?
This provision of the Affordable Care Act requires almost everyone (young, old, employed, unemployed) to have basic health insurance called minimum essential coverage. The provision, also known as the individual mandate, outlines a person's role in both making and obtaining affordable health care. You can only ignore the mandate under certain circumstances.
If you do not qualify for an exemption and refuse to buy health insurance, the government will penalize you. The penalty is known as the shared responsibility payment, and you pay it when you file your taxes. The Supreme Court has ruled the payment is legal because the penalty is a tax [source: IRS].
9: To whom does the provision apply?
Most Americans of all ages living in the United States must abide by the individual shared responsibility provision. In addition, foreigners and "resident aliens" who live in the U.S. long enough during the calendar year and pay income taxes also must have minimum essential coverage.
However, people who are in the country for a short time and who are not required to pay income taxes don't have to follow the law. In case you're wondering, the IRS considers people resident aliens if they have a green card, which means you are a "lawful permanent resident" [sources: IRS, IRS].
8: What counts as minimum essential coverage?
What does minimal coverage actually mean? If you participate in an employer-sponsored health plan or COBRA, or have health care coverage as a retired person, you have the requisite coverage.
Moreover, you, your kids, your spouse and any other dependents likely have minimal coverage if you purchase health insurance on your own or through the health insurance marketplace. You're also covered if you participate in Medicare Part A or Medicare Advantage; Medicaid; the Children's Health Insurance Program; or have health insurance through the Department of Veterans Affairs. In general, other categories include the following [sources: IRS, USAF Services]:
- Most types of TRICARE coverage, which covers medically necessary treatments.
- Peace Corps volunteers who have coverage through that agency.
- Civilian employees who fall under the Department of Defense's Nonappropriated Fund Health Benefit Program.
- Those who participate in the Refugee Medical Assistance program.
- People working at universities who are covered by self-funded insurance.
- Residents who have insurance through state high-risk pools.
7: Who's exempt?
As we said before, the individual shared responsibility provision pretty much requires everyone to have some form of health insurance. However, certain people can ask the government to exempt them from the law. In some cases, the IRS can exempt people, and in other cases a person has to apply for the exemption through the health insurance marketplace.
Who can apply? You might be eligible if you have religious objection; are a member of a federally recognized Native American tribe; are doing time in prison or are an illegal alien. Moreover, you might be exempted if your minimum income levels are so low that you don't have to pay income taxes. You also can ask for an exemption if you suffered some type of financial hardship that forced you to face a significant increase in living expenses. Domestic hardships, such as the death of a spouse or a weather-related disaster, count too. You also can claim an exemption if the price of the lowest insurance premium is more than 8 percent of your household income [sources: IRS, HHS].
6: Do children and the elderly have to abide by the individual shared responsibility provision?
Senior citizens must have minimum coverage as do children, unless they qualify for an exemption. As we said before, Medicare Part A, Medicare Part C and the Children's Health Insurance Program all are qualifying plans. Any single or married filer who claims a child as a dependent for income tax purposes is responsible for making sure that child is covered [source: IRS].