Virtually all of the provisions of the Affordable Care Act (ACA) are currently in force.  Effective April 1, 2014 the provisions include the requirement that all Americans maintain minimum health insurance coverage or face a penalty. 

As of April 1, 2014, the penalty for 2014 is the greater of $95 or one percent of income.  Beginning in 2015, the penalty increases each year.  In 2015, the penalty is 2% of income or $325 per person. In 2016 and later years, it is 2.5% of income or $695 per person. After that, the penalty is adjusted for inflation.

If you are uninsured for just part of the year, 1/12 of the yearly penalty applies to each month you are uninsured. If you are uninsured for less than 3 months, you do not have to make a payment.  You pay the fee on your 2014 federal income tax return. Most people will file this return in 2015.

To avoid paying the penalty, you need health insurance that qualifies as minimum essential coverage.  If you are covered by any of the following, you are considered covered and do not have to pay a penalty:

  • Any Marketplace plan, or any individual insurance plan you already have;
  • Any employer plan (including COBRA), with or without “grandfathered” status. This includes retiree plans;
  • Medicare;
  • Medicaid;
  • The Children’s Health Insurance Program (CHIP);
  • TRICARE (for current service members and military retirees, their families, and survivors);
  • Veterans health care programs (including the Veterans Health Care Program, VA Civilian Health and Medical Program (CHAMPVA), and Spina Bifida Health Care Benefits Program);
  • Peace Corps Volunteer plans; and
  • Self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014.

However, under certain circumstances, individuals may qualify for an exemption from the penalty.  You may qualify for an exemption if:

  • You are uninsured for less than 3 months of the year;
  • The lowest-priced coverage available to you would cost more than 8% of your household income;
  • You do not have to file a tax return because your income is too low;
  • You are a member of a federally recognized tribe or eligible for services through an Indian Health Services provider;
  • You are a member of a recognized health care sharing ministry;
  • You are a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare;
  • You are incarcerated, and not awaiting the disposition of charges against you; and
  • You are not lawfully present in the U.S.

Additionally, there are hardship exemptions which include homelessness, facing eviction or foreclosure, victims of domestic violence, victims of fires, floods, & other disasters.

Also, you are exempt if you were determined ineligible for Medicaid because your state did not expand eligibility for Medicaid under the Affordable Care Act.  Therefore, Pennsylvania residents who would have been eligible for Medicaid if Pennsylvania accepted Medicaid expansion funds are currently exempt. However, this may change in the near future if Pennsylvania’s pending Medicaid Waiver application is approved by CMS.

More regulatory changes are likely in the future as ACA’s full effects become known, as well as in response to political and consumer pressure.  We will continue to keep you informed as changes occur.

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