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Health Reform 101

with Lisa Zamosky

WebMD helps readers understand their health insurance and the new health care reform law. The Affordable Care Act is bringing sweeping changes to American health care. Lisa Zamosky is here to help you navigate the health care maze and understand how these changes affect you.

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Thursday, December 16, 2010

Do I Have to Buy Health Insurance?

A reader asks, “Will I be fined for failing to buy health insurance? I am 53 and make $12,000 a year.”

This question was sparked, no doubt, by the much-talked-about individual mandate, which is a central component of the health reform law. With some exceptions, this provision would require all U.S. citizens to purchase health insurance or face a penalty beginning in 2014.

At 53, with an annual income of $12,000, this reader would likely qualify for Medicaid. Starting in 2014, states will receive additional funding from the federal government to cover the cost of extending Medicaid benefits. If you’re an individual making $14,000 per year or a family of four earning $29,000 or less (133 percent of the federal poverty level), you would receive health benefits via Medicaid and avoid paying a penalty.

Helping the Middle Class Pay for Insurance

For the middle class, tax credits will be made available to help pay for health plans purchased through health insurance exchanges that will be set up by 2014.

If you’re an individual making $43,000 or less, or a family of four making less than $88,000, the government will subsidize your insurance premiums. You may also be eligible for reduced co-payments, coinsurance, and deductibles to assist with the cost of coverage.

But if you fail to obtain insurance, you will be penalized.

Here’s how it breaks down: Starting in 2014 the tax penalty will be $95 and that amount will gradually increase to the greater of $695 per year for individuals, $2085 per family or 2.5 percent of a household’s income.

There will be exemptions for financial hardship.

The Individual Mandate — A Little Background

The individual mandate was included in the new law as a way of paying for an additional 30 million uninsured Americans to have insurance by requiring everyone to pay into the system.

This is one the most hotly debated aspects of the new law. A number of lawsuits have been filed around the country questioning whether or not it is constitutional to require Americans to purchase a product, in this case, health insurance. Recent rulings in Michigan and Virginia upheld the new law.

However, earlier this week, a federal judge in Richmond, Va. ruled against it, saying that the individual mandate to purchase health insurance violates the Constitution.

All this is to say that there will be many legal battles between now and 2014 when this mandate is scheduled to take effect. Ultimately the decision as to whether it’s legal for the government to require people to purchase health insurance will likely fall to the Supreme Court.

Join the conversation: What are your thoughts about the individual mandate?

Got a health insurance question? Post it below. I’ll respond in this blog each Thursday to as many of your questions as I can.

The opinions expressed in the WebMD Blogs are of the author and the author alone. They do not reflect the opinions of WebMD and they have not been reviewed by a WebMD physician or any member of the WebMD editorial staff for accuracy, balance or objectivity. WebMD Blogs are not a substitute for professional medical advice, diagnosis, or treatment. Never delay or disregard seeking professional medical advice from your physician or other qualified health provider because of something you have read on WebMD. WebMD does not endorse any specific product, service or treatment. If you think you have a medical emergency, call your doctor or dial 911 immediately.

Sources

  1. Healthcare.gov
  2. Kaiser Family Foundation Summary of New Health Reform Law
  3. New York Times: Judge Voids Key Element of Obama Health Care Law

Posted by: Lisa Zamosky at 7:54 am

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