Mandatory Health Insurance Will Begin in 2014

Beginning in 2014 the Patient Protection & Affordable Care Act (the health care legislation sometimes known as Obama Care) will impose the new requirement that U.S. persons, with certain exceptions, have minimal, essential health care insurance.

A minimum essential health care policy is one in which the insurer pays 60% of the average medical expenses incurred by an average person over the course of one year.

How this will affect your family will depend upon a number of issues:

Already insured – If you will already be insured through an employer plan, Medicare, Medicaid, the Veterans Administration, or a private plan that provides minimal, essential care, then you will not be subject to any penalties under this new law.

Exempt from the mandatory insurance requirement – The following individuals will be exempt from the insurance mandate and will not be subject to a penalty for being uninsured:

  • Individuals who have a religious exemption
  • Those not lawfully present in the United States
  • Incarcerated individuals
  • Those who cannot afford coverage based on formulas contained in the law
  • Those who have income below the federal income tax filing threshold
  • Those who are members of Indian tribes
  • Those who were uninsured for short coverage gaps of less than three months
  • Those who have received a hardship waiver from the Secretary of Health and Human Services, who are residing outside of the United States, or who are bona fide residents of any possession of the United States.

Cannot afford coverage – Individuals and families whose household income is between 100% and 400% of the federal poverty level will qualify for a varying amount of subsidy to help pay for the insurance in the form of a Premium Assistance Credit. To qualify for that credit, the insurance must be acquired from an American Health Benefit Exchange operated by the individual or family’s state, or by the Federal Government. These exchanges are scheduled to be up and running as of October 1, 2013, and the policies purchased through them will be effective as of January 1, 2014.

It is important to note that the subsidy is really just a tax credit based upon family income. It can be estimated in advance and used to reduce the monthly insurance premiums; it can be claimed as a refundable credit on the tax return for the year; or it can be some combination of both. However, it is based upon the current year’s income and must be reconciled on the tax return for the year. If too much was used as a premium subsidy, it must be repaid. If there is excess, it is refundable.

If household income is below 100% of the poverty level, the individual or family qualifies for Medicaid.

Penalty for noncompliance – The penalty for noncompliance will be the greater of either a flat dollar amount or a percentage of income:

  • For 2014, $95 per uninsured adult ($47.50 for a child) or 1 percent of household income over the income tax filing threshold
  • For 2015, $325 per uninsured adult ($162.50 for a child) or 2 percent of household income over the income tax filing threshold
  • For 2016 and beyond, $695 per uninsured adult ($347.50 for a child) or 2.5 percent of household income over the income tax filing threshold.

Flat dollar amounts – The flat dollar amount for a family will be capped at 300% of the adult amount. For example, the maximum in 2016 for a family will be $2,085 (300% of $695). The child rate will apply to family members under the age of 18.

Overall penalty cap – The overall penalty will be capped at the national average premium for a minimal, essential coverage plan purchased through an exchange. This amount won’t be known until a later date.

If you have any questions as to how this new insurance requirement will affect you, please call.

Steve Trojan, CPA is owner of SMT & Associates, Inc. (, a Crystal Lake IL based tax and accounting firm with a growing niche of health care and veterinary clients. He can be reached at 815-788-5114.


About Steve Trojan, CPA

Steve Trojan, CPA is owner of SMT & Associates, Inc. (, a Crystal Lake IL based tax and accounting firm. He can be reached at 815-788-5114.
This entry was posted in Health Care. Bookmark the permalink.

3 Responses to Mandatory Health Insurance Will Begin in 2014

  1. Brian Huber says:

    I’m evaluating continuing education for tax professionals that includes ObamaCare at, but I really just need a long nap now that this year’s tax season is finally finished.

  2. Andrew Christianson says:

    I’ve been working on and off for the past 9 months and live with an aunt that forces me to pay her $400 a month, no exceptions. Either that or live on the street. I can’t afford this new mandatory health care program. I think this forced program on individuals should be outlawed. Either that or don’t take any of my taxes so I can afford it. Even then, what if I all of a sudden run out of work again? This is absurd! I can’t believe this is happening! We all should’ve received something in the mail as well… not just show it on the news. I rarely watch the news. Good thing I have a friend and a co-worker that told me about it. Obama isn’t helping anyone with this. He’s making the nation more poor! Sure, some people may need healthcare, but I don’t! I can’t afford it! I have bills to pay and a greedy aunt! I’m having problems in my life right now. I need all the help I can get! I never agreed for this to be forced on me. Penalized!? What is this crap!? I get health insurance when I can afford it. More and more I am embarrassed to call myself an American citizen. This is crap! I’m very sorry I voted for Obama. What an ass!!!

Leave a Reply

Your email address will not be published.