Are You Subject To Obama’s Individual Mandate?


Where Should American’s Buy Health Insurance In 2013 C

Yesterday I posted, “How To Protect Yourself From Obamacare Scams.”  The goal of that post was to alert you to what is, and is not required of you under Obamacare.

Today’s post is a continuation of the one from yesterday.  Although a recent Kaiser Health News poll indicates that 40% of Americans do not understand what Obamacare requires, very little education efforts are happening in my state of TX for middle-class Americans.

Ignorance of the law is no excuse.  You will still be subject to I.R.S. penalties if you do not have government approved health insurance on January 1, 2014.

If you are successfully self-employed, it is likely that you will get little, if any, reminders that you must buy government approved health insurance.  However, if you do not, don’t be surprised if the I.R.S. adds a “Shared Responsibility Payment” to your taxes due for 2014.

In this post I want to explain some options that are available to you.

THE POTENTIAL PROBLEM

The latest statistics that I have seen indicate that a little over 60% of those who are not eligible for Medicare get health insurance at work.  Mathematically, that means that the inverse is just as true.  Just under 40% of American employees do not get health insurance benefits at work.

The person who landscapes your yard, cuts your hair, or serves your food in a restaurant is more likely to be responsible to pay his own health insurance or remain uninsured.

THE PLANNED OBAMACARE FIX

That is sad, but a fix is on its way.  Starting in January, thanks to the Individual Mandate that is in Obamacare, these Americans, along with all the other Americans who are self-employed, laid-off or part-time employees are required to spend their money to buy government approved health insurance.

Not only must they spend their money on health insurance for themselves, they must also spend part of the money they were using to clothe, feed and shelter their families on health insurance for their spouses and/or children.

According to the U.S. Supreme Court, government approved health insurance is now a tax that all Americans must pay.  For many Americans, their health insurance premiums will be much greater than their income or Medicare taxes.

THE PROPOSED PENALTY

Unfortunately, there is not many options to escape the taxes.  There are no deductions that can be claimed.  If you do not want to pay the health insurance tax, your only option is to pay a “shared responsibility payment,” (formerly known as the “penalty.”)

That payment is $95 per adult or 1% of your household income, whichever is greater.  I have heard of several people who plan to boycott Obamacare and just pay the penalty.  In my opinion, that is a mistake.

POLITICAL PING-PONG

While I am not a fan of Obamacare, I am also not a fan of seeing people in pain.  Before health insurance became a political Ping-Pong ball for the politicians in D.C. it was a necessary tool to handle the high cost of medical treatment.

Obamacare requires Americans to buy government approved health insurance.  It provides guidelines and rules to allow hospitals to earn bonus money from the government but it does nothing to cap what doctors and hospitals charge for their services.  Since the PPACA was signed into law in 2010, our nation has seen the fees of doctors and hospitals continue to increase faster than inflation.

If you become seriously ill or suffer a major accident, your only option to relieve the pain will be to visit a doctor or hospital.  They demand, and justly so, payment for their services.

A 1986 federal law, called the Emergency Treatment And Labor Act, guarantees that if you show up in the ER, the hospital must “assess and stabilize” you regardless of your health insurance status.  However, if you need further curative treatment, the hospital is not required to provide you with health care unless you are able to pay for it.

AN EXAMPLE

As I write this post, my wife commented on Phil Mickelson winning the British Open.   I am not a golfer.  Nor do I watch the game on TV.  I only know three things about Phil Mickelson.  He is left-handed, he is very wealthy and he does commercials for an arthritis drug.

He is proof that regardless of how much money a person has, disease can strike.

Unless you are independently wealthy, your only financial option is to have good health insurance.  Boycotting Obamacare for political reasons does not make sense to me.

DELAYING OBAMACARE

Eventually, every American will have a government approved Qualifying Health Plan (QHP).  However, because of the way the rules are written, you may be able to post-pone buying one of Obama’s Essential Benefit Plans (EBP) for a few months, or even a year.

If you still have a health insurance plan that was in effect prior to March 23, 2010 you probably have a “grandfathered” plan.  You are not required to do anything in the next year if you do not want to.

If you do not have a grandfathered plan, you will be required to purchase one of 4 government approved Essential Benefit Plans by January 2015.

If you have a QHP with an effective date after March 23, 2010 but before December 31, 2013 you are able to postpone buying one of the government approved EBPs until your current plan renews in 2014.

That will give you time to study your options and make an informed decision.  It will also give the Department of Health and Human Services time to identify problems with the Federally Facilitated Exchanges and correct them.

If you do not have a Qualifying Health Plan by the end of this year you will have no choice but to buy one of 4 government approved Essential Benefit Plans during the National Open Enrollment (October 1, 2013 – March 31, 2013)

A couple of weeks ago one of my clients asked me, “What is to prevent me from not buying health insurance in 2014 and if I get injured just sign up for insurance at the hospital?”

I had to tell him that that might be an option during the first 3 months of the year but would not work during the last 9 months.

People who do not buy the government approved EBP during the National Open Enrollment will not be able to buy guaranteed issue health insurance until the following October for coverage that does not start until January 1, 2015 unless they qualify for a Special Election Period (SEP).  All SEPs are conditional on a person having prior health insurance.

POLITICAL IMPLICATIONS

The politicians and press imply that the only option for Americans to buy a government approved Essential Benefit Plan will be the new health insurance exchanges.  That is not true.

The exchanges will be the only option for those who want to take advantage of government programs.  However, there will be a thriving marketplace for middle-class Americans who do not want, or qualify for, government programs.

Both marketplaces will sell the same plans.  Both marketplaces will offer guaranteed approval regardless of any pre-existing medical conditions.  It will be totally up to you whether you wish to buy your government approved EBP through the exchange or directly from the insurance company.

The difference is going to be whether you want to claim a government program and who you will call if you need help.

If you elect to buy your government approved EBP through your state’s exchange system you will call a Navigator, In-Person Assistant or certified Insurance Broker to help you with both the government red-tape and insurance application.

If you elect to buy your government approved EBP outside of your state’s exchange you will call your local Insurance Broker or the Customer Service department of the insurance company you want.  They can help you with the insurance application.  (Since you are not looking for government assistance, there will be no reason to complete government forms.)

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