Posted on March 5, 2014

Deadline Approaching for Individuals to Obtain Coverage under ACA

According to the Affordable Care Act (ACA), individuals must obtain health coverage in 2014 or pay a penalty—this is sometimes called the individual mandate. As long as individuals enroll in a health care benefit plan before March 31, 2014, they can avoid paying the penalty.

Here are some frequently asked questions that you and your employees might find helpful:

What qualifies as coverage?

To avoid paying the penalty, individuals must enroll in an insurance plan that meets the “minimum essential coverage” requirements. If they have any of the following types of coverage in 2014, they won’t have to pay the penalty:

* Any Marketplace plan
* Any individual insurance plan they already have
* Any employer plan (including COBRA and retiree plans), with or without “grandfathered” status
* 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
* Self-funded health coverage offered to students by universities for plan or policy years that begin on or before December 31, 2014

Other plans may also qualify, so it is best to verify with their health coverage provider.

Examples of plans that do not qualify as minimum essential coverage include:

* Coverage only for vision or dental care
* Workers’ compensation
* Coverage only for specific diseases or conditions
* Plans that only offer discounts on medical care

How much is the penalty?

For 2014, the penalty for not enrolling before March 31, 2014, is the higher of these two calculations:

* 1% of annual household income (the maximum penalty is the national average of the annual premium for a bronze-level health plan)
* $95 per adult in the household, or $47.50 per child under 18 (the maximum penalty per family for this calculation is $285)

This penalty will increase every year:
* In 2015, it will be 2% of household income or $325 per person.
* In 2016, it will be 2.5% of household income or $695 per person.
* After 2016, it will be adjusted for inflation.

Remember, a penalty payment is not the same as purchasing coverage—individuals must pay the penalty and be responsible for 100% of their own health care costs.

Who is exempt from paying the penalty?

First, those who enroll in a health plan before March 31, 2014 will not have to pay a penalty.

Second, individuals that are only uninsured for part of the year will only have to pay a partial penalty or no penalty at all: 1/12 of the total penalty for each month they are not insured and no penalty if they are uninsured for less than three months.

Third, no penalty is owed if the annual household income is less than $10,150.

Lastly, there are several other situations that could cause someone to be exempt from the penalty. Go to for a complete list.

For more information about the ACA and how Paycor can help prepare your organization for compliance requirements, visit our health care reform webpage.