Requirement to Purchase Health Insurance

Be Covered, or Be Fined through the Individual Shared Responsibility Provision

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Most Americans are required to purchase health insurance under the Affordable Care Act. This is known as the individual mandate. It is the provision of the law that says that all Americans must have healthcare coverage, either through their employer, a private insurer, or a government program. If they don't get healthcare coverage, they will be fined. 

The individual mandate is also being called the Individual Shared Responsibility Provision.

Government officials avoid the word "mandate" because it implies taxpayers are being forced into something.

Why the Individual Mandate Was Included in the Affordable Care Act

In March 2010, the Affordable Care Act (the official name for healthcare reform, also known as Obamacare) was passed into law in the United States. It governs the cost, acquisition and availability of health insurance and coverage. The new law was met with a great deal of argument and contention. Probably the most contentious of the arguments was over the individual mandate. There were two important reasons the individual mandate was included in the law:

1. The Impact of the Uninsured Who Delay Care and Can't Pay Their Medical Bills

Statistics showed that millions of Americans had no insurance coverage and were, therefore, not getting the healthcare they needed. Often it was because insurance was too expensive, but perhaps just as often, it was because people chose not to purchase insurance even if they could afford it.

With no insurance, those who get sick wait too long, getting even sicker, then show up in the emergency room for care when they become desperate. Due to the EMTALA law, they cannot legally be denied care. For many that means their medical bills never get paid because they are so overwhelming. When people don't pay their own bills, the taxpayers, or those who do have insurance, end up paying for the care of those who did not pay for the care they received.

Therefore, one of the reasons for the individual mandate was to put the responsibility for payment on the shoulders of those who receive care, relieving those who are already responsibly paying for their healthcare coverage.

2. Requiring Insurance Coverage for All Makes it More Affordable for All

The second reason regards affordability for everyone. Statistics showed that young people who did not have employer-sponsored healthcare coverage were not purchasing insurance for themselves. They didn't think they needed it - after all, they were young and healthy!

But by including them in the requirement to purchase health insurance, the risk gets spread among those who are sick and those who are healthy, too. By balancing out the risk, the cost should come down for everyone.

Supreme Court Rules on the ACA and the Individual Mandate

Eventually the arguments over the ACA were heard by the US Supreme Court, with a large part of the focus on the individual mandate. On the one side, those who were against the law claimed that no American should be forced to buy anything.

Those who supported the individual mandate argued that we are forced to pay for a lot of things already like Social Security or Medicare, and paying for health insurance would be logical in that framework.

In June 2012, the Supreme Court upheld most of the provisions of the Affordable Care Act, declaring it constitutional. (You can learn more about the major points of the Affordable Care Act here.) Specifically they stated that the individual mandate is constitutional because it amounts to a tax, and the government does have the right to tax its citizens.

What Does the Individual Mandate Mean to You?

The effective date for the Individual Mandate was January 1, 2014. Penalties were phased in through 2016 for those who do not purchase health insurance.

If you already maintain health insurance, perhaps through your employer, or if you are covered by a government program that subsidizes the cost of your care, like Medicare, Tricare, Medicaid or another program, then it means nothing changes for you, as long as you continue your coverage, and as long as your plan is considered to be a Qualified Health Plan (QHP).

If you don't carry health insurance or have any other form of coverage, it will means that you will be forced to purchase it, or that if you decide against purchasing insurance, you will be fined. The Kaiser Family Foundation put together an easy to use flow chart for figuring out whether or not you will be forced to purchase health insurance, and if not, how much you will be fined.

If you need help choosing the right QHP, then, depending on the state you live in, there may be people to help you, ACA navigators or in-person assisters.

The question now is affordability. By the time Americans are forced to purchase health insurance, the system of Health Insurance Exchanges will be in place. Their intent is to spread the risk, reduce the costs, and cover as many Americans as possible.

• Learn more about the major provisions of the Affordable Care Act.

How to Buy Individual Private Health Insurance

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