The Patient Protection and Affordable Care Act

Provisions Impacting Self-Funded Employers and their Employees
 

INDIVIDUAL RESPONSIBILITY
 

Individual Coverage Mandate

All U.S. citizens and legal residents will now be required to maintain Minimum Essential Coverage. For any month they (or their dependents) are uncovered, they will be assessed a penalty.

For each month an individual (or their dependents) went without coverage, they will be assessed 1/12th of the applicable penalty. Penalties will be included in the individual’s following year tax return. Penalty amounts will be as follows:

• In 2014: The higher of $95 or 1% of income - (but no higher than the national average for Bronze Level Qualified Health Plans)
• In 2015: The higher of $325 or 2% of income (but no higher than the national average for Bronze Level Qualified Health Plans)
• In 2016: The higher of $695 or 2.5% of income (but no higher than the national average for Bronze Level Qualified Health Plans)
• For subsequent years: The product of the previous year’s penalty and the annual cost-of-living adjustment (but no higher than the national average for Bronze Level Qualified Health Plans)

The penalty for any individual under the age of 18 who is in non-compliance of the coverage mandate will be one-half of the applicable amount.

Penalties will be capped at three times the penalty amount regardless of family size.

Exemptions based on affordability will be granted if one’s required contribution exceeds 8% of their gross income.

(Please note: This document was produced by the Self-Insurance Institute of America to provide an overview of the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act. It does not cover every aspect of the legislation, and certain provisions of the law may change or be modified by additional rules and regulations. This document does not constitute legal or tax advice.)