Am I required to buy the Obamacare health insurance plan? Consumer Q&A
Once you start asking questions about the health reform law, it’s hard to stop. That’s because many of the big provisions of the law haven’t taken effect yet so it’s hard to understand how everything will work on a purely practical level.
We’re getting a lot of questions these days about health reform – and answering all of them that we can. Last week on Yahoo Answers, for example, we replied to someone who rather skillfully crammed several excellent questions into a single brief paragraph:
- Is Obamacare a one-size-fits-all deal? Is everyone required to buy the same plan?
- If you opt out, will you face a one-time penalty or an annual penalty?
- How do these things affect employers who are required to provide group health coverage?
- Will employers be incentivized to lay off workers or not hire so they won’t have to provide health insurance?
The eHealthInsurance reply was voted Best Answer:
You packed a lot of questions into that short space. To answer your first one, no, the health reform law does not require everyone to buy a specific plan. It establishes basic coverage levels for plans, but there will still be a variety of options to choose from, from a variety of insurance companies. This will be true both for individuals who do not have health insurance through their employers, and for employers who are buying coverage for their employees.
With regards to penalties, the first thing to note is that not everyone will face one. Individuals and families who earn less than 133% of the federal poverty level will not be required to buy coverage, though they may be eligible to enroll in Medicaid. People earning more than that will be required to purchase coverage (some may be eligible for government subsidies to help them afford it) or face a annual penalty on their taxes. The first year, the penalty is a mere $95 or one percent of taxable income for the year. It will increase in succeeding years.
Employers who do not have fifty or more full-time employees (or the equivalent in part-time workers) will not be required to purchase group health insurance coverage. Employers with fifty or more workers will be required to buy coverage or pay a penalty.
Penalties for employers who opt not to buy coverage can get a little complicated. Say you have 61 full-time employees and you choose not to offer them coverage. If one or more of your employees obtains coverage on their own and receives a government subsidy to help them afford it, that’s what triggers your penalty. You will pay a fee of $2,000 for each employee, excluding the first thirty. So, you’re penalty in 2014 would be $2,000 x 31 employees = $62,000.
I suppose it’s possible that some employers (those who are just above that fifty-employee mark) might see this as an incentive to reduce their number of workers, but the fact is that many employers with fifty or more workers already provide insurance today. Even for those who don’t, the penalties they face for not providing coverage are still significantly less than the cost of actually providing group health insurance.
Image by Flickr user DorkyMum