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Individual Mandate

As of 2014, most taxpaying individuals are required to maintain a minimum level of healthcare coverage or potentially pay a penalty for failure to doing so under the Affordable Care Act. Individuals will be required to maintain minimum essential coverage for themselves and their dependents. Some individuals will be exempt from the mandate or the penalty, while others may be given financial assistance to help them pay for the cost of health insurance.


Minimum Essential Coverage Defined

Minimum essential coverage includes any of the following:

• Coverage under certain government-sponsored plans

• Employer-sponsored plans, with respect to any employee

• Plans in the individual market,

• Grandfathered health plans; and

• Any other health benefits coverage, such as a state health benefits risk pool, as recognized by the HHS Secretary.


Minimum essential coverage does not include health insurance coverage consisting of excepted benefits, such as dental-only coverage. Participation in employer-sponsored coverage satisfies the individual mandate regardless if the coverage is grandfathered or non-grandfathered, affordable or unaffordable.


Individuals who are not eligible for a Premium Subsidy

When assessing whether a potential penalty may apply or not, it is important to understand that the following employees will never receive a premium subsidy under any of the following circumstances:


• The employee does not enroll in the Marketplace;

• The Full-time employee has household income in excess of 400% of the poverty level;

• The Employee is eligible for coverage that is both affordable and provides minimum value;

• The employee voluntarily enrolls in an employer sponsored plan, even if that coverage is unaffordable or doesn't provide minimum value;

• The employee is eligible for Medicare Part A, Medicaid, CHIP or TRICARE; or

• The employee is not a citizen or legal resident.


Individual Mandate Penalty

If individuals don't have health insurance, they may be required to pay a penalty or tax which will increase over time. The penalty amounts are as follows:

• For 2014 - $95 per adult and $47.50 per child (up to a maximum of $285 for a family) or 1% of family income, whichever is greater

• For 2015 - $325 per adult and $162.50 per child (up to a maximum of $975 for a family) or 2% of family income, whichever is greater

• For 2016 - 2018 - $695 per adult and $347.50 per child (up to a maximum of $2,085 for a family) or 2.5% of family income, whichever is greater.


The future penalties will be increased by the cost-of-living adjustment.


Exceptions to When The Penalty Will Apply

A penalty will not be assessed on individuals who:


1. cannot afford coverage based on formulas contained in the law,

2. have income below the federal income tax filing threshold,

3. are members of Indian tribes,

4. were uninsured for short coverage gaps of less than three months;

5. have a religious exemption;

6. are incarcerated; or

7. have received a hardship waiver from the Secretary, or are residing outside of the United States, or are bona fide residents of any possession of the United States.


This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.