Important Dates for Avoiding the Individual Mandate Penalty

Written by: Christina Merhar
Originally published on October 25, 2013. Last updated December 13, 2013.

Employees wondering when they need to sign up for health insurance to avoid the individual mandate penalty now have a firm answer. They need to sign up for coverage on or before March 31, 2014. The deadline to sign up for coverage by March 31 corresponds with the last day of open enrollment.

important dates for individual mandate

Previously, it was uncertain if Americans would have to be covered by March 31, or just sign up by March 31. This is an important distinction, as there is a lag between signing up and actually being covered. 

This extra time comes as relief to many who have been trying to enroll online and have faced technical difficulties with the new online marketplaces. The good news is, there is still a lot of time to enroll. 

The deadline was confirmed by the Department of Health and Human Services earlier this week -- people who buy coverage at any point during the open enrollment period will not pay a penalty.

Important Dates for Individual Mandate

Here's a run-down of the key dates for open enrollment, getting coverage, and avoiding the individual mandate penalty:

  • October 1, 2013: Online health insurance exchanges opened for plan shopping and enrollment.

  • December 15, 2013: Last day to enroll in an exchange health plan, if you want coverage to start on January 1, 2014. (Note: the exact date depends on your state. It may be later, or sooner.)

  • January 1, 2014: Earliest coverage date for new qualified health plans.

  • March 31, 2014: Open enrollment for qualified health plans ends. If you miss this date, you will have to wait until fall 2014 to enroll, unless you have a qualifying event. Then you can enroll in a special enrollment period. To confirm, March 31 is the last day to sign up for a qualified health plan. 

  • October 15, 2014 - December 7, 2014: Open enrollment period for 2015 coverage. 

How Much is the Individual Mandate Penalty?

The individual mandate penalty (aka individual shared responsibility payment) is phased-in over three years:

  • In 2014, the penalty is $95 per person up to a maximum of three times that amount for a family ($285) or 1% of household income if greater.

  • In 2015, the penalty will be $325 per person up to a maximum of three times that amount for a family ($975) or 2% of household income if greater.

  • In 2016, the penalty will be $695 per person per year up to a maximum of three times that amount for a family ($2,085) or 2.5% of household income if greater.

  • Beginning in 2017, the penalties will be increased by the cost-of-living adjustment.

What Types of Health Coverage Counts?

The following plans count:

  1. Coverage under government sponsored programs (e.g. Medicare and Medicaid).

  2. Coverage under an "eligible employer-sponsored plan" (e.g. health insurance your job provides).

  3. Coverage under a plan offered in the individual market within a State (e.g. an individual plan purchased through the exchanges or through a broker).

  4. Coverage under a grandfathered health plan.

  5. Other coverage, such as coverage under a State risk pool, that the Secretary of Health and Human Services (HHS) chooses to recognize as minimum essential health coverage. 

Plans that do not count include:

  1. Coverage consisting of excepted benefits, such as dental-only coverage.

  2. Employer-based coverage that is not offered through an "eligible employer-sponsored plan", such as a health insurance allowance your employer provides you.

Is Anyone Exempt From The Penalties?

There are a few exemptions from the individual mandate penalties:

  • Low-income individuals (people with incomes below the threshold required for filing taxes, equivalent to $9,750 for a single person in 2012 and $27,100 for a married couple with two children)

  • Undocumented immigrants

  • Indian tribal members and their dependents

  • Individuals who cannot afford coverage (required to spend more than 8% of their income for health insurance)

  • Individuals with a coverage gap of three or fewer months

  • Members of certain religious groups or health care sharing ministries

  • Incarcerated individuals

  • Low-income individuals in states that have opted out of the Medicaid expansion 

  • Individuals with no plan options in their state's health insurance marketplace

Questions about the individual mandate penalty dates and deadlines? Leave a comment below. 

Originally published on October 25, 2013. Last updated December 13, 2013.


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