Who is Required to be Self-Insured?
The ACA requires most U.S. citizens and legal residents to carry minimum essential coverage on themselves and their dependents.
The deadline: Anyone required to have health insurance (see below for exceptions) must generally be covered by Jan. 1, 2014. (But the law also allows you to be uninsured for less that three months without facing a penalty, so technically you have until March 31 to get covered.) To have insurance effective by then, consumers need to choose a policy by Feb. 15, in order to allow enough time for their enrollment to be processed for coverage to start on March 1 (most insurance coverage starts on the first of the month).
Exemptions for getting insured will be allowed for:
- A short-term coverage gap – If you’re uninsured for less than three months of the year, you will not face a penalty. Coverage for even one day during a month counts as coverage for the entire month.
- Anyone who is not a U.S. citizen or resident alien legally present in the United States
- Incarcerated individuals (no exemption for those incarcerated pending disposition of charges)
- Enrolled members of federally recognized American Indian and Alaskan Native tribes
- Those whose household income is below the minimum threshold for filing a tax return
- Individuals with household income below 100% of the federal poverty level in states that did not expand Medicaid. Those living in states that did expand Medicaid should enroll in Medicaid to meet the individual mandate, though it is likely that they would be exempt for hardship or income level reasons, should they choose not to enroll.
- Religious objections – Exemptions will be granted to members of qualified religious sects, provided that:
- The teachings and beliefs of the religious sect are conscientiously opposed to the acceptance of private or public insurance, and have been in existence since December 31, 1950.
- Members have provided for the reasonable needs of dependent members (for a substantial amount of time).
- Members of a health care sharing ministry are exempt, provided that:
- The ministry is a tax-exempt entity (non-profit).
- The ministry shares a set of common ethical or religious beliefs on sharing medical expenses among the members.
- Membership is retained even after a medical condition.
- The ministry (or predecessor) has been in existence since December 31, 1999.
- An annual audit is done with the ministry by an independent certified public accounting firm.
- Those who cannot afford the available minimum essential coverage options. Coverage will be deemed unaffordable if it exceeds 8% of household income. The percentage is determined by dividing the taxpayer’s monthly contribution for coverage for self and exemptions by the month’s net household income. The income amount is increased by any pre-tax insurance premium withholding, and the premium amount is decreased by any available premium assistance credit. Note the following scenarios:
- Because monthly income can vary, the taxpayer may be exempt from the penalty in some months and not exempt in others.
- In some situations, a taxpayer may have to purchase insurance for a dependent or spouse separately from his or her own insurance. In such cases, the 8% unaffordability threshold for the plan is based upon the annual premium for the lowest cost bronze plan available through a Health Insurance Marketplace, minus the premium credit the dependent or spouse would receive through the Marketplace.
- Financial hardship – As a catchall for anyone who doesn’t meet the other financial exemptions, the Act allows the Secretary of Health and Human Services to exempt anyone for whom purchasing insurance would create a hardship.
- For those seeking an exemption, the Health Insurance Marketplace will be able to provide certificates of exemption for many of the exemption categories. Individuals will also be able to claim exemptions when they file their federal income tax return.
- Individuals who are not required to file a federal return are automatically exempt and do not need to take any further action.
- U.S. citizens who live abroad for a calendar year (or at least 330 days within a 12-month period) are treated as having minimum essential coverage for the year (or period). They need take no further action.