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Exceptions to the Individual Mandate: Which Americans Don’t Have to Buy Insurance?

Posted on Mar 29, 2014 by Ailee Slater ()  | Tags: Obamacare, Affordable Care Act, U.S. health care, individual mandate, individual insurance, online insurance exchanges, insurance exemptions

On March 31, all Americans without health insurance are required to be enrolled with an online health marketplace, and to have purchased a suitable insurance plan. Any American who hasn’t purchased insurance by that date, and who isn’t fully covered by an employer, family member or public program such as Medicare, will be liable to pay a fine – US$95 or 1 percent of yearly household income, whichever figure is greater. 

That requirement to purchase health insurance, also known as the individual mandate, is a key component of the Affordable Care Act. Most U.S. residents are well aware of the mandate – it has been a subject of heated debate between politicians and health care advocates who either agree with the policy of taxing the uninsured, or feel that the government cannot force citizens to purchase insurance. 

However, Americans may be less aware that the individual mandate has exceptions – according to Obamacare, some people actually can remain uninsured without paying a fine. Who are these people that - unlike the majority of U.S. citizens and residents - are not required to hold a health care coverage policy or join an online exchange by 31 March? 

Citizens of the United States who live or work abroad do not have to purchase insurance or pay an uninsured fine, assuming they are out of the U.S. for at least 330 days of every calendar year. This means that expatriates – regardless of whether or not they have insurance abroad – do not have to purchase a health care plan in the United States. A good thing, too, seeing as few U.S. insurance policies offer coverage for medical services provided outside of the country. 

Besides not being physically present in the United States, some citizens may also be exempt from the individual mandate due to their financial situation. Although low-cost plans and federal subsidies have been designed to help all Americans purchase insurance, coverage can still be expensive: and according to the law, anyone who would spend over 8 percent of their yearly household income paying for insurance is not required to buy a plan. 

Likewise, Americans with an income so low that it is not taxable are also exempt from having to purchase insurance or pay a fine. Single Americans who earn less than US$10,000 per year and married couples jointly earning less than US$20,000 per year do not have to file taxes – and, therefore, people in those income brackets also do not have to adhere to the individual mandate. 

Along with financial hardships, the Affordable Care Act lists a number of other hardships that will except a U.S. resident from the individual mandate. A taxpayer who can prove that for the year of 2014 he was homeless, faced eviction or was evicted in the previous six months is not required to purchase insurance. Financial complications such as filing for bankruptcy, dealing with medical expenses or providing care and financial support to a family member can also render a tax payer free from the mandate. Major life complications can also provide a get-out clause: suffering domestic violence, experiencing a death in the family, or recovering from a flood, fire or other environmental or human-caused catastrophe. 

As with many laws and tax policies in the United States, exemptions are also extended to certain religious or ethnic sects. Any member of a nationally recognized Native tribe – a tribe which already provides medical care through a recognized Indian Health Services provider – is exempt from the individual mandate. Also exempt are members of religious groups that already object to insurance, Social Security or Medicare: the Amish and Christian Scientists, for example. 

Some Americans who don’t fit qualify for an individual mandate exemption under any of the aforementioned circumstances may still be eligible for an insurance deadline extension. Although the Affordable Care Act states that all citizens must hold a coverage plan by the 31 of March in order to avoid paying a penalty, people who have recently experienced a “qualifying life event” can register later than that: if they purchase a plan within 60 days of their qualifying life event, no financial penalty will be imposed. 

Qualifying life events refer to major life changes that make it inconvenient or impossible to meet the March 31 deadline. Having a baby, adopting or fostering a child, getting married or moving to a new area are all example of events that, if experienced, can qualify an American citizen to enroll with an insurance plan after the 31 of March. Obamacare also allows an individual mandate deadline extension for anyone who has unexpectedly lost insurance: an employee who has recently been fired, for example, and needs extra time to assess their individual insurance options. A citizen having lost health care coverage due to divorce, because of unexpected expiration of a health plan or due to becoming suddenly ineligible for Medicare can, likewise, buy a new health coverage policy at a later date. 

Apart from these few exceptions, individual insurance cannot be purchased after 31 March through an online exchange: the enrollment period will have ended, and Americans without an exempt status will be left without health insurance for 2014 – unless coverage is gained through the workplace, or through qualifying for a government insurance program such as Medicaid, which allows enrollment throughout the year. The Affordable Care Act has been the subject of plenty of debate and criticism, but with the individual mandate enrollment deadline looming, it’s a good bet that online insurance exchanges are gearing up for plenty of web traffic in the coming days. 

 

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