UNIVERSAL HEALTH COVERAGE MANDATES

I just finished a continuing education class on the new universal health coverage mandates. I also visited with people in the health care insurance business. After last Tuesday referendum on the current administrations policies, there may be changes. As of today, however, this is where we stand.

First, the coverage requirement does not include individuals whose employer sponsored coverage exceeds 8% of their household income. So if your household income is $50,000 then you do not have to take the coverage if the annual employer sponsored coverage exceeds $4,000 (8% of $50,000). Since insurance premiums tend to increase with age, older individuals that have higher premiums , will be more likely to exceed the 8% rule. Hence, the people most likely to need insurance will be less likely to be covered.

In addition, coverage rules to do apply to exempted religious individuals, Indian tribes and incarcerated individuals.

Penalty for Non-paying Qualified Individuals
If an individual that qualifies for coverage, does not maintain coverage, they will be penalized. The penalty is the lesser of (1) a flat dollar amount or (2) a percentage of income. Now it gets confusing.

The flat dollar amount is actually the lower of two separate calculations based on a government mandated applicable dollar amount. For 2014 this amount is $95.00. After you have determined the
appropriate flat dollar amount, you calculate the percentage amount and chose the highest number as your flat dollar amount.

The percentage method takes a percentage of household income adjusted by the filing threshold amount (part of you annual 1040). The kicker is that household income is the sum of the taxpayer and all individual accounted for in the family unit. Therefore, if the kids work, you must include their income!

Now choose the appropriate amount and you have your penalty. These penalties will be a part of your annual tax return (form 1040).

If you are confused, you are not alone.

Insurance premiums will be increasing 30 to 50% at your renewal date.
Your insurance premiums will be increasing because you will also be paying for those that can not afford regular insurance premiums. Here is how this provision works:

Should you not be covered by an employer, the government is creating a new program similar to CHIPS called QHP. The QHP insurance will be provided by all insurance companies at discounted rates. All insurance companies must participate.

There is more in this legislation including the tax credits for those that can not afford any of the above. The long and short of this legislation is that those of us that pay insurance premiums will pay more to subsidize the QHP. Those of us that pay federal income taxes will pay more to offset the tax credit program.