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What Is Individual Mandate In Health Insurance

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What Is The Individual Mandate

What happens to individual health insurance mandate under the new federal tax law?

The individual mandate provision of the federal health law requires you, your family, children or anyone else that you claim as a dependent on your taxes to have health insurance. This coverage can be supplied through your employer, public programs like Medicare or Medicaid or an individual policy that you purchase.

Federal Tax For Not Having Health Coverage Was Eliminated As Of 2019

In late 2017, the Tax Cuts and Jobs Act was enacted. Its a wide-ranging piece of legislation, but one of its provisions was to reduce the tax for not having health coverage to $0, effective after the end of 2018.2

This means that you will no longer have to pay a fine to the federal government if you choose to go without health insurance. The individual mandate itself is still in effect, but there is no longer an enforcement mechanism, so its essentially irrelevant.

The rest of the Affordable Care Act and its many patient protections remain in effect. But the elimination of the tax associated with the individual mandate is the crux of the Texas v. US lawsuit, in which 20 GOP-led states are working to overturn the entire ACA.

Individual Mandate For Health Insurance Coverage

Beginning July 1, 2007, the following individuals age 18 and over are required by M.G.L. c. 111M, § 2 to obtain and maintain health insurance designated as creditable coverage if such coverage is deemed affordable to them under schedules set annually by the Board:

residents of the Commonwealth, and individuals who become residents of the Commonwealth, within 63 days of becoming a resident.

In tax years 2008 and thereafter, residents who have terminated any prior creditable coverage are required to re-obtain creditable coverage within 63 days of such termination.

. The Connector will define the parameters regarding what constitutes creditable coverage. The minimum requirements for policies to qualify as creditable coverage may vary from year to year, as determined by the Connector. See 956 CMR 5.03, Minimum Creditable Coverage.

Applicability of Mandate: Affordability. An individual is required to obtain and maintain health insurance only if affordable coverage is determined to be available to that individual. The Connector is responsible for setting annual Affordability and Premium Schedules related to coverage. Generally, the determination is based on the premium amount that is deemed affordable based on an individuals adjusted gross income. The Department will follow the determinations of affordability as determined by the Connector. The Department will not make determinations of affordability separate from the Connector.

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What The Data Tell Us

  • Eliminating the individual mandate would have significant repercussions for enrollment in the individual market and more broadly across all sources of health insurance.
  • The federal government would face higher costs: Not only would it forgo tax revenue from the mandate, but it would also subsidize a more expensive population.
  • The individual mandate keeps a higher share of younger and healthier people enrolled in the risk pool and therefore helps to cushion against a situation in which a disproportionate number of older, less healthy individuals buy coverage.
  • What Are Grounds For A Fine


    Under the Affordable Care Act, a fine is assessed for each month you, your spouse, or your dependents are without qualifying health insurance. Qualifying health insurance has to count as minimum essential coverage. Plans that count as minimum essential coverage include:

    • The Childrens Health Insurance Program
    • A parents health insurance plan for those under the age of 26

    You can learn more about each of these, plus additional qualifying plans, here. Additionally, it is important to be aware of the plans that do not count as qualifying health coverage, such as short-term insurance, hospital indemnity plans, accident insurance, critical illness insurance, workers comp, or coverage for solely dental and/or vision.

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    How The Acas Individual Mandate Came To Beand Where It Stands Now

    The individual mandatethe requirement under the Affordable Care Act that most Americans obtain health insurancehas been the most disputed feature of the often-contested law, according to John McDonough of Harvard T.H. Chan School of Public Health.

    McDonough, professor of the practice of public health, explored the origins of the mandate and its future prospects in an in-depth Politico article published on May 22, 2021. The piece explored how the concept of the individual mandate was introduced in 1989 by Stuart Butler, who worked at the time at the conservative Heritage Foundation, and traced how Butlers thinking on the mandate and health policy at large has evolved over more than 30 years.

    For 33 years, and especially since President Barack Obama signed the ACA into law in 2010, the mandate has been a prize and a booby trap for Republicans and Democrats, conservatives and progressives alike, rarely at the same time, McDonough wrote. Initially a policy favored by many Republicans and conservatives and reviled by most Democrats, both sides swapped roles during the ACAs creation between 2008 and 2010. Since then, the mandate has been the least favored part of the now popular health law, and the most disputed featured of one of U.S. historys most contested laws.

    States That Have Their Own Individual Mandates

    Although there is no longer a federal penalty for being uninsured, some states have created their own individual mandates with penalties for non-compliance imposed by the state department of taxation.

    2019: Massachusetts, New Jersey, and DC

    Massachusetts overhauled its health care system in 2006 with the states health care reform later serving as a model for some of the Affordable Care Act and has had an individual mandate ever since.3 From 2014 through 2018, Massachusetts didnt impose an additional tax on state residents who were uninsured, since they were subject to the federal tax instead. But starting in 2019, Massachusetts reinstated its state-based penalty for non-compliance with the individual mandate.

    New Jersey and DC both enacted legislation in 2018 to implement individual mandates starting in 2019, with tax penalties for non-compliance.4 Residents who werent insured in 2019 will have to pay the penalty when they file their state/district tax returns in early 2020.

    2020: California and Rhode Island

    California and Rhode Island both enacted legislation in 2019 to create state-based individual mandates, effective in 2020, with tax penalties for non-compliance.5

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    Rhode Island Individual Mandate Guide

    History of legislation

    The State of Rhode Islands individual mandate, requiring residents to have qualifying coverage throughout the year, goes into effect on January 1, 2020. It was signed into law on July 5, 2019. Rhode Island issued proposed regulations outlining the employer reporting obligation.

    Important dates

    Employers are required to report annually by January 31. The employee mail form deadline is January 31.

    Employer obligations

    Employers must submit a report of covered individuals to the state, where a flat file version of the 1095-B is used.

    Rhode Island individual mandate penalties

    Process for filing

    A flat file format, , of the 1095-B is loaded directly into the Rhode Island site. A real-time confirmation is shown on the webpage once the file is successfully uploaded.

    What Counts As Qualifying Health Coverage

    Health Care: What Is the Individual Mandate?

    As long as you had qualifying coverage, you didnt have to worry about the individual mandate. This is less important starting in 2019, though, because the individual mandate isnt in effect. Qualifying health coverage may also be referred to as minimum essential coverage.

    The following are examples of qualifying health coverage:

    • All health plans you buy through your states or the federal health insurance marketplace

    • Some individual health plans bought outside the marketplace, if they meet the standards for qualified health plans

    • Group health insurance and job-based health plans, including COBRA coverage

    • Medicare Part A or Part C

    • Medicaid coverage, except for limited coverage plans

    • The Childrens Health Insurance Program

    • Insurance coverage you get through a parents plan

    • Most student health plans

    • A grandfathered individual insurance plan that youve had since March 23, 2010, or earlier

    • Some types of veterans health coverage through the Department of Veterans Affairs

    • Most TRICARE plans

    • Refugee Medical Assistance

    If you need help signing up for a new plan, check our guide on how to sign up for health insurance.

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    Health Insurance Will Work Like Auto Insurance

    The individual mandate in health reform resembles state laws requiring all car and truck drivers to have accident insurance. Who wants their neighbors uninsured son to drive recklessly and get into a big accident? An innocent driver could face costly repairs and if lots of uninsured drivers had accidents, the rates for auto insurance would shoot up for all residents.

    Like auto insurance, health insurance has to cover everyone to avoid price increases for responsible citizens. When reform goes into full effect starting in 2014, coverage will be available and affordable for almost everyone. After that, we do not want uninsured people to show up at the hospital emergency room and pass the bills to their neighbors. There will be exceptions to the mandate for people who have religious objections and for those who still cannot afford insurance after Affordable Care expands coverage. But the mandate will apply to the tiny number who, at that point, can afford insurance but refuse to get it. That will encourage almost everyone to have coverage. With the mandate in place, experts estimate that health insurance will cost 10% to 20% less than it would without the mandate.

    New Jersey Individual Mandate Guide

    History of legislation

    The State of New Jerseys individual mandate, requiring residents to have qualifying coverage throughout the year, went into effect on January 1, 2019. It was signed into law on May 30, 2018. The state released reporting requirements in June 2019 and continues to release more information.

    Important dates

    Employers are required to report annually by the federal deadline . The employee mail form deadline is March 2, 2021.

    Employer obligations

    In-state and out-of-state employers who employ New Jersey residents, even if the employer does not withhold New Jersey payroll taxes. The reporting obligation is limited to Applicable Large Employers , but requirements differ based on whether the employer offers self-insured or fully-insured coverage.

    If an ALE is sending 1095-C forms to employees and filing 1095-C and 1094-C forms with the IRS, they are required to file forms with the state. Employers who only have fully-insured coverage should verify that their insurer will fulfill the reporting requirements for the state. If an ALEs insurer does not meet the obligation to file, the employer is required to file themselves. Likewise, all ALEs who participate in a multi-employer plan should verify reporting with their plan sponsor, or they will be required to file themselves.

    New Jersey individual mandate penalties

    Process for filing

    Frequently asked questions

    If you replace or correct files with the IRS, should these files be shared with New Jersey?

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    New Jersey Individual Mandate

    New Jersey requires residents who can afford coverage to have ACA-compliant health insurance or pay a penalty on residents who go without health insurance but can afford it. The state offers subsidies to help lower-income residents afford health insurance. There are certain exemptions.

    The penalty, also known as the Shared Responsibility Payment, varies depending on income and family size, and is capped at the cost of the average statewide premium for bronze health insurance plans.

    According to, the minimum tax penalty for individuals is $695, and the maximum was $3,012 for the 2020 tax year. A family of five earning $200,000 or less paid a minimum tax penalty in 2020 of $2,351 and a maximum is $5,074.

    Why Are States Passing New Individual Mandate Laws

    How Repeal of the Individual Mandate and Expansion of Loosely Regulated ...

    Representatives from these states have explained that individual mandate laws are designed to address not only a public health care concern ensuring that people continue to have health coverage but also to keep their health insurance markets more stable.

    Because there are so many factors that affect health insurance premiums, it can be difficult to parse out the impact of individual changes. But the projected average individual market premiums for 2020 in California, DC, Massachusetts, New Jersey, and Rhode Island are all lower than the national average in Massachusetts and Rhode Island theyre the lowest in the country.7

    In states that dont have an individual mandate which includes the majority of the country the concern is that without a penalty for being uninsured, more people might opt to go without coverage. The Congressional Budget Office estimated in 2018 that over the coming decade, the number of uninsured people would increase by about 8 million people as a result of the elimination of the individual mandate penalty, and the expectation is that most of these people are young and healthy.8

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    Does My Coverage Meet Aca Requirements

    If you sign up for a plan that does not meet the minimum requirements for essential health coverage under the Affordable Care Act, you will still be penalized the tax for noncompliance. Having a noncompliant plan means that youre wasting your money on a deficient policy. It also means youre getting fewer benefits than someone with an ACA-compliant plan.

    If you signed up for a policy directly on the marketplace, you can rest assured that your policy complies with the minimum essential coverage requirements under Obamacare. Every insurance company that sells a plan on the marketplace has been verified by the U.S. Department of Health and Human Services that their plans are compliant and affordable.

    All health insurance policies are now required to meet this minimum standard for every participant. Whether you buy on or off the marketplace, every major-medical policy created on or after March 23, 2010 must adhere to the requirements of the ACA. This includes:

    • Traditional insurance plans
    • Childrens Health Insurance Program
    • Employer-sponsored coverage
    • TRICARE, which is insurance for active or retired military members and their families

    Here are the 10 essential benefits that all new policies sold on or off the marketplace, or through your employer must include:

    • Preventive care
    • Rehabilitative and habilitative services and equipment
    • Mental health services
    • Lab services

    Federal Mandated Health Benefits

    Federal law includes a number of insurance-related mandates:

    ACA essential health benefits The Affordable Care Act was a landmark change in terms of mandated health benefits, creating a universal floor in terms of the essential health benefits that must be included on every new individual and small group health plan in every state.

    The requirement to include EHBs applies to all individual and small group plans with effective dates of January 1, 2014, or later. The list of EHBs includes:

    • Ambulatory services
    • Pediatric services, including oral and vision care .

    Within the parameters of those general EHB categories, each state defines its own benchmark plan, with insurers then modeling their individual and small group plans on the state’s EHB benchmark plan. So even though all new individual and small group plans have to cover all of the EHBs, the specifics of the coverage will vary from one state to another, and will depend on various coverage mandates that each state imposes.

    With the exception of preventive care and hospitalization services, EHBs do not have to be covered by large group plans , or by self-insured plans of any size.

    Large group plans do tend to be fairly robust, however. And some other mandates apply to the large group market.

    COBRA continuation coverageCOBRA is a federal law that provides certain former employees and their dependents the right to continue coverage for a maximum of 18 to 36 months. .

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    Mandated Insurance Benefits And The Cost Of Health Insurance

    Most peoplewhether for or against mandatesagree that mandated health benefits increase health insurance premiums. Depending on the mandated benefit and how that benefit is defined, the increased cost of a monthly premium can increase from less than 1% to more than 5%.

    Trying to figure out how a mandated benefit will impact an insurance premium is very complicated. The mandate laws differ from state to state and even for the same mandate, the rules and regulations may vary.

    For example, most states mandate coverage for chiropractors, but the number of allowed visits may vary from state to state. One state may limit the number of chiropractor visits to four each year while another state may require insurers to cover up to 12 chiropractor visits each year. Since chiropractor services can be expensive, the impact on health insurance premiums may be greater in the state with a more generous benefit.

    Another example is infertility coverage, which is not required under federal law but is required by several states. Across those states, there’s wide variation in terms of what has to be covered in terms of infertility treatment, which means that the impact on premiums differs significantly from state to state.

    Massachusetts Personal Income Tax Return Requirements Relating To Health Insurance Coverage

    Health Groups Support Measure, Would Mandate Individual Health Insurance

    Residents Required to Report Health Insurance Coverage on Personal Income Tax Return.

    A resident who files or is required to file a Massachusetts personal income tax return is required to indicate on the return whether he or she had creditable coverage in force during the taxable year, as described below, and as applicable, to document such coverage. Coverage may be individual coverage or coverage as a named beneficiary of a policy covering multiple individuals. Generally, this documentation will be accomplished by providing information furnished to the resident on Form MA 1099-HC, as discussed in 830 CMR 111M.2.1. If the coverage requirement cannot be demonstrated and coverage is deemed affordable for the taxpayer, the taxpayer will be assessed the penalty at M.G.L. c. 111M, § 2, unless an exception applies ).

    Schedule HC, Health Care Information.

    In general, taxpayers are required to provide health insurance information to the Commissioner by completing Schedule HC, Health Care Information, as part of their personal income tax returns. Taxpayers who have required coverage will so indicate and will be required to provide information documenting such coverage. In most cases, the information necessary to document coverage will have been provided to the taxpayer by the taxpayers insurer or employer on Form MA 1099-HC ).

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