20 Feb 2019

What is the Health Insurance Mandate and Why Does it Exist?

What is the Health Insurance Mandate and Why Does it Exist?

You have probably heard about the health insurance mandate by now, but may not be clear on what it is. The health insurance mandate is the health care reform act that passed and became law in 2010, and included an individual mandate that was taken in effect in 2014. The mandate is officially known as the Affordable Care Act but is widely referred to as Obamacare. Through 2018, this law imposed a penalty on anyone who did not have the health insurance coverage required by the law.

Why Does the Mandate Exist?

The mandate rationale was that health insurance, just like any other insurance coverage, works by the creation of risk pools. These risk pools are groups formed by those who have insurance coverage. In the typical risk pool, all members will pay insurance premiums, while only a few of them will need to use the insurance and file medical claims. If a risk pool for health insurance is big enough and has adequate healthy members paying insurance premiums, then there will be enough funds left to cover the cost of the claims for those who become ill.

Who Must Have Health Insurance According to the Health Insurance Mandate?

With the health insurance mandate, all U.S. citizens and permanent residents, except some who are exempt, are required to have insurance coverage. This includes those who are healthy. The healthy help broaden the risk pools so premiums will be low enough to ensure everyone can afford coverage; including those who have chronic, and costly medical conditions. Those who are exempt include:

  •   Individuals who would pay more than 8% of their income for health insurance coverage, after considering subsidies and employer contributions
  •   Families with incomes that are so low they don’t require a tax return
  •   People who are forbidden to have health insurance coverage based on religious grounds
  •   People are incarcerated for crimes
  •   Native American tribal members
  •   Undocumented immigrants

What are the Health Insurance Coverage Requirements?

If you fall into the category of people that must maintain health insurance coverage, make sure you have the right kind of coverage. The health insurance coverage you buy must meet the Federal definition of what is called “essential care.” Examples of plans that qualify as meeting the requirements of essential care include:

  •   Medicare
  •   Medicaid
  •   Employer’s health insurance plans
  •   Children’s Health Insurance Program (CHIP)
  •   Tricare (for members of military services and their families)
  •   Veterans’ medical benefits
  •   Individual health care policies that provide minimum levels of coverage or benefits
  •   Any plans that existed before enactment of the law that were “grandfathered” in

The health insurance mandate requires that all major medical health plans and qualified health plans meet the Minimum Essential Coverage standards. This means they must have an actual value of 60% or more and they must cover 10 essential health benefits. What are the 10 essential benefits that must be covered by your medical insurance plan?

  •   Laboratory services
  •   Emergency services
  •   Prescription drugs
  •   Mental health and substance abuse disorder services
  •   Maternity and newborn care
  •   Pediatric services, including vision and dental care
  •   Rehabilitative and habilitative devices and services
  •   Ambulatory patient services
  •   Preventive and wellness services with chronic disease management
  •   Hospitalization

Of course, plans that offer these benefits have varying deductibles and copays as well as differing premiums. You will need to choose a plan that meets your family’s needs, and that fits into your budget as far as premiums and out-of-pocket expenses go.

What Happens If You Don’t Have Coverage to Meet the Mandate Requirements?

If you don’t have health insurance, you will have to pay the cost of your medical care out-of-pocket. Just one serious illness or injury could be financially devastating. You will also have to pay up at tax time. As of 2014, tax penalties for not having the proper health insurance coverage started accruing. These penalties were to phase in during a three-year period.

This aspect of the law penalizes taxpayers who don’t have coverage for themselves and their dependents. However, legislation that was passed near the end of 2017 ended those penalties starting with the 2019 tax year. But, through 2018, most people who are required to maintain health insurance coverage are still penalized if they don’t have it. Those who qualify for an exemption for the 2018 tax year will not have to pay the fine for not having the required coverage.

To learn more about health insurance plans that adhere to the health insurance mandate requirements, contact the professionals at HealthQuoteInfo.com at 1-855-614-5057. Our licensed insurance experts will be happy to answer any questions you have.

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