A refresher on the new health care reform mandates
Starting in 2014, individuals must maintain "minimum essential coverage" or pay a penalty. The penalty will equal the greater of (1) 1 percent of modified adjusted gross income (AGI) or $95 per person in 2014, (2) 2 percent of AGI or $325 per person in 2015, and (3) 2.5 percent of AGI or $695 per person in 2016, indexed for inflation in later years. "Minimum essential coverage" includes coverage under a qualifying or grandfathered insurance company or employer-sponsored plan, government-sponsored program such as Medicare or Medicaid or a state-based exchange. The penalty for dependents under the age of 18 will be capped at 50 percent of the adult individual's penalty. The penalty for each family will be capped at 300 percent of the adult individual's penalty. The maximum penalty will also be capped at an amount equal to the average national premium for exchange coverage.
There are a number of exceptions to the individual mandate, including exceptions for individuals who have income below the tax filing threshold, incur hardships, have religious objections, are not lawfully present in the United States, are incarcerated or are overseas.
EMPLOYER 'PLAY OR PAY' MANDATE
Like the individual mandate, employers will be required to offer health care coverage for their employees or pay a penalty. This is often referred to as the employer "play or pay" mandate.
Large employers will be required to offer qualifying health coverage or pay a penalty of $2,000 per full-time employee, except the first 30 employees. For this purpose, "large employers" are employers who employ an average of at least 50 full-time employees on business days during the preceding calendar year. "Full-time employees" are limited to employees who average at least 30 hours of service per week. Smaller employers will be exempt from the "play or pay" mandate.
Employers must also pay a penalty of $3,000 for each full-time employee with income below 400 percent of the federal poverty level (FPL) (in March 2010, $88,200 for a family of four) who opts for exchange coverage in lieu of employer-based coverage. Employers must also offer "free choice" vouchers to certain lower income employees if the employee's cost of employer-provided health coverage ranges from 8 percent to 9.8 percent.