Obamacare Looming: Exactly what are you required to do?

Ask Roxy is a public service blog from the Law Offices of Roxanne Sher Olson (www.roxanneolson.com).  Roxanne is an attorney in Santa Cruz, CA.  Email your questions to askroxy@roxanneolson.com

Health care is a very political subject because there is a ton of money involved, but you’re not asking about politics.  Also, while the big picture economics are very interesting (here is a great video), I’m guessing that you want to know how the law affects the economics of your pocketbook.  There is a lot to know so I’ll break it down into easily digestible sections here:

Overview:

The Affordable Care Act (AKA Obamacare) goes into effect on January 1, 2014.  At that point every American that does not qualify for an exemption must have health insurance.  If you do not have health insurance you will have to pay a fee along with your 2014 tax payment.  

It can’t be just any weird insurance “plan” you invent, either (if your brain works anything like mine the first thing you thought was, “what if my buddy and I pay $10 into a pot every month and if either of us gets sick we’ll use the entire pot to pay for whatever tiny percent of our bill it covers, voila health insurance!”), no, it must be a legit “minimum essential coverage” plan.  The idea behind the fee is that if you don’t have insurance and you end up needing health care with an astronomical price tag you will probably go bankrupt, file for medicaid and make the government pay for your health care costs.  Since by “the government” we mean “us taxpayers” it makes sense that anyone who chooses this strategy should pay a little extra money into the government coffers up front.  That is why the government is calling the fee a “shared responsibility payment.”

What will the fee be if I don’t get insurance?

The fee that you will have to pay if you do not get health insurance will increase every year: from 1% of income (or $95 per adult, whichever is higher) in 2014 to 2.5% of income (or $695 per adult) in 2016. The fee for children is half the adult amount ($47.50 per child in 2014). The most a family would have to pay in 2014 is $285.  It is important to be clear here, though, that paying the fee does not mean that you are covered by health insurance, it just means that the taxpayers were reimbursed $95.00 for the thousands and thousands they will have to spend if you get cancer and can’t afford to pay the bills by your self.  There are a whole host of exemptions to avoid this fee if you qualify so make sure your CPA is up on the details.  If, for example, you are part of a religion that is fundamentally against insurance (including the free ones from the government like medicare) you can get out of the fee.  I have always wondered how G-d felt about insurance companies, so if any of you are members of such a religion please give the rest of us details on how you figured it out.  

How will you get health insurance and how much will it cost? 

TO READ THE REST OF THIS POST, INCLUDING A FULL SCHEDULE OF IMPORTANT ACA DATES AND MY LEGAL DISCLAIMER, GO TO  WWW.ASK-ROXY.COM