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Administration Releases New Rules To Implement Health Law’s Individual Mandate

By Mary Agnes Carey

August 27th, 2013, 6:16 PM

As congressional Republicans push for a delay in the 2010 health law’s individual mandate, the Obama administration Tuesday announced final regulations implementing the requirement that most Americans have health insurance coverage by Jan. 1 or pay a fine.

The document from the Treasury Department and the Internal Revenue Service is in addition to regulations the Department of Health and Human Services published in late June.

The regulations specify nine categories of individuals who are exempt from the mandate, including people who can’t afford coverage or taxpayers whose income is so low they don’t have to file a tax return, according to a fact sheet from the agencies. People in jail or who are not in the country lawfully are also exempt, as are individuals who experience a coverage gap of three months or less.

When filing 2014 taxes in 2015, individuals must indicate on their returns if they have health insurance coverage and, if not, pay a fine. The individual penalty is the greater of $95 or 1 percent of income, rising to the greater of $695 or 2.5 percent of income, in 2016. The Congressional Budget Office estimates that less than 2 percent of Americans who don’t have health insurance will pay the fine.

In July, the Obama Administration delayed for one year a provision in the health law that employers with 50 or more workers offer coverage to employees or pay a fine. Republicans said that if the administration delayed the “employer mandate” for a year, individuals should also get a reprieve from the health law’s individual mandate set to begin next January. In July, the House of Representatives passed legislation to delay the individual mandate requirement for a year, but the measure is not expected to come to a vote in the Senate.

Tuesday’s announcement from Treasury and the IRS — along with the final individual mandate regulations that HHS issued in June — make it clear that the administration is moving ahead with implementing the individual mandate, which has become one of the law’s most politically explosive elements. House Republicans have tried to repeal or defund the law 40 times on the House floor and more votes are likely this fall.

Supporters of the law and many health care economists say that the requirement that most Americans have coverage or pay a fine is critical to making the law work as intended.

“The individual mandate is one of two lynchpins that make the Affordable Care Act work,” Washington state Insurance Commissioner Mike Kreidler said in a statement. “You simply cannot guarantee everyone coverage — regardless of their health status — without also requiring that everyone participate. The individual mandate guarantees personal responsibility. Without it, there’s nothing to prevent people from only buying health insurance when they need it — which is similar to allowing people to buy homeowners insurance when their house is on fire.”

America’s Health Insurance Plans, a trade group representing health insurers, wants the health law’s tax on health insurance plans repealed but supports the individual mandate.

“There is broad agreement that requiring health plans to cover everyone, including those with pre-existing conditions, cannot work without an individual mandate,” the group said in a statement. “By requiring all Americans to obtain health coverage, the risk pool becomes large enough to account for the sickest Americans, without the adverse effect of skyrocketing premiums.”

13 Responses to “Administration Releases New Rules To Implement Health Law’s Individual Mandate”

  1. Sam says:

    “There is broad agreement that requiring health plans to cover everyone, including those with pre-existing conditions, cannot work without an individual mandate,” the group said in a statement. “By requiring all Americans to obtain health coverage, the risk pool becomes large enough to account for the sickest Americans, without the adverse effect of skyrocketing premiums.”

    Individual mandate? Personal responsibility? Imagine that! A profoundly Republican principle. An idea that, 30 years ago, was conceived by the conservative Heritage Foundation and would eventually become the exact same idea that Mitt Romney enacted as governor in Massachusetts. Then, wonder of wonders, Romneycare would become Obamacare. A Republican idea that required all Americans be personally responsible and purchase their own private health insurance. A conservative idea that liberals would eventually come to embrace. In spite of themselves and their dysfunction, Congress came full circle by introducing a conservative idea that would eventually, over the past 30 years, become embraced by liberals. The irony is, members of Congress didn’t even know they were doing it. Proof that there’s pure genius hidden in utter stupidity.

  2. genXY says:

    I agree with the individual mandate.I personally would have liked to have seen, a more basic hospital/OPpolicy and a catastrophic rider with it ,for those of us 18-45years,who use the system infrequently. Conservative,liberal etc etc irrelevant now, get ready to fork over your premiums.Republicans rolled over for the Democrats to get their health care dollars,and Democrats will roll over for the Republicans when they want their military dollars.I don’t think there is a difference anymore.

  3. AJ says:

    Why wouldn’t the insurance plans support the individual mandate? It requires people to buy their product, a product that I’m convinced most people would get if they could afford it. I don’t have a problem with the premise of the mandate, since it spreads risk and that’s exactly what insurance is: spreading the financial burden of the unlucky across the lucky, but I do have an issue with a law that forces people to purchase a product that has investors/stock holders/for profts as the seller.

  4. Dan Barrett says:

    Genxy wants the less costly catastrophic plan because – it is hypothesized – such as he or she uses the system “infrequently.” While that may be true, an insurance agent would not be doing their job if they did not emphasize to this younger person that insurance is not for what is anticipated, but what is not. In other words, if you cannot fund a $6,250 deductible – don’t have one.

  5. anna says:

    “In other words, if you cannot fund a $6,250 deductible – don’t have one.”

    Good point, if there was any truth to it. Fact is, the subsidies are 100 percent funded. The entire law is 100 percent funded. If you took the time to read it, every aspect of the Affordable Care Act (ACA) is fully funded. The funding comes for many various sources, all of which were contained in the legislation when it was originally drafted. All of this scary talk coming from those opposed to the new law is just that. TALK! If the ACA wasn’t funded, why would Republicans keep saying that they want to defund it? Huh? Maybe you need to do your homework so you can at least try to keep up with an intelligent forum.

  6. James says:

    “Good point, if there was any truth to it. Fact is, the subsidies are 100 percent funded. The entire law is 100 percent funded. If you took the time to read it, every aspect of the Affordable Care Act (ACA) is fully funded. The funding comes for many various sources, all of which were contained in the legislation when it was originally drafted. All of this scary talk coming from those opposed to the new law is just that. TALK! If the ACA wasn’t funded, why would Republicans keep saying that they want to defund it? Huh? Maybe you need to do your homework so you can at least try to keep up with an intelligent forum.”

    Missing the point of what the last person said. The insurance policy is funded. What the person is stating however is that if you cannot pay for $6,250.00 of your medical costs every plan year in addition to your subsidized premiums, then don’t have an insurance policy that has a $6,250.00 deductible. Problem: to get a deductible lower than $6,250.00 results in: Higher premiums. What are the subsidies based on? The second lowest silver plan premium on the exchange. Now granted, the majority of the plans out there now aren’t going to have a $6,250.00 deductible, but the out of pocket maximum might be that much each plan year, so the comment is still valid. Lambasting someone only works if the derision is accurately sold.

  7. Don Levit says:

    Yes, the $6,250 deductible needs to be funded.
    The larger the funded deductible, the smaller the premium.
    Through working with Milliman, an actuarial firm, we have designed funded deductibles which grow every month, allowing every family member for a reasonable cost, to fund the deductibles, not with cash, but with paid-up insurance benefits.
    Our patented design will be available for self funded goiups before year end, and to fully insured policyholders in Texas in 2014.
    Look for National Prosperity Life and Health to change the dynamics.
    Don Levit

  8. Michael Bertaut says:

    There are lots of ways to allow people affected by the Individual Mandate to “dial their own risk” without shutting them out of the program completely.

    Unfortunately, while creating new structures and funding others, PPACA also outlawed any health insurance product that does not provide “kitchen sink” coverage benefits.

    Pre-PPACA individuals were allowed to self insure their doctor visits, or their prescriptions, and have a policy that covered in or out-patient hospitals costs with very low deductibles. Many folks selected these plans, willing to “dial their own risk” for the cost of an office visit or prescription drugs they might need.

    No more. The Fed has spoken. Any plan that does not cover the kitchen sink is not health insurance and thus illegal to sell under PPACA.

    That to me, seems like an outright rejection of the average person’s willingness to accept financial risk on their own, and their own common sense.

    MRB

  9. Don Levit says:

    MRB:
    You are correct that these services must be covered, but an individual can still decide to pay for them out of pocket.
    Under our plan design, the paid-up benefits continue to grow, allowing the individual’s premium to decrease AS IF his deductible was raised to his paid-up benefits balance. (our plans provides first dollar coverage, but policyholders still have the ultimate decision on which procedures are paid for by insurance versus their out of pocket). The more they pay out of pocket, the higher their paid-up coverage, and the lower their premiums.
    At $25,000 of paid-up coverage, premiums are reduced 60%.
    Don Levit

  10. George Fulmore says:

    How is whether one has insurance or not defined? What if one only has it for part of the year? Will the fine be pro-rated or something? This cannot be black or white?

  11. John says:

    Who here thinks that they can forecast their next chronic illness. Who here thinks that they can forecast the next accident that they will suffer? Yet, some morons think it’s smart to pick and choose health coverage that excludes certain coverages. A la carte health coverage and catastrophic coverage will never work because none of us has a crystal ball when it come to forecasting the future of our health. I have a friend that constantly complains that he is dorced to carry maternity care in his comprehensive employer provided health policy when he and his wife are not planning to have another child. Guess what? That same friend just found out that his 51 year old wife is pregnant. At her age, her doctor labeled it as a high risk pregnancy. The news came as a shock to both of them! Don’t get me wrong, I’m all in favor of catastrophic health coverage or a la carte health coverage just as long as the enormous deductible is met. The problem with a la carte coverage is that you always get the chronic disease that your policy excludes. The problem with catastrophic coverage is that not too many people can afford to pay a $10,000 per person/per year deductible that must be satisfied before insurance begins to pay. Most people that purchase catastrophic coverage or a la carte coverage are really cheapskates to begin with and, in their wildest dreams, could never pay such enormous deductibles. Hence, such cheapskates simply go bankrupt rather than pay their hospital bill. Sad part is, this is the kind of status quo healthcare that Republicans want to continue.

  12. George g. says:

    Damn! I keep “dialing up my own risk” and I keep getting the wrong number!

  13. Hank says:

    Hey George,

    Me too! I guess my dial is broken or I have a cloudy crystal ball. Can I borrow your window cleaner?

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