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The Coverage Requirements under the Affordable Care Act

Copyright © 2014 AARP. All rights reserved.

The Affordable Care Act (ACA) aims to get more people covered so they can get access to health care and improve the quality of healthcare people receive.

Here’s what you can expect if you don’t purchase insurance, and how to get a sense of the costs and options as you select a plan a plan, the types of financial assistance you may qualify to receive from the federal government depending on your income, and what steps you may want to take if your income is fairly high to anticipate or avoid tax consequences.

What you are required to have

Under the ACA, every American is required to have what’s called minimum essential coverage through a healthcare plan. That coverage can take many forms, including the following:

  • An employer-sponsored plan, including COBRA and retiree coverage.

  • An individual plan purchased in the Health Insurance Marketplace (also called the exchange).

  • Medicare, Medicaid, or CHIP (Children’s Health Insurance Program) coverage.

  • TRICARE, which covers uniformed military personnel.

  • Some plans administered by the Veterans Administration.

  • Coverage for Peace Corps volunteers.

  • Self-funded health coverage plans that universities offer to students for plan or policy years that begin on or before December 31, 2014. (Starting in 2015, these types of plans may or may not count as minimum essential coverage; they must demonstrate to the federal government that they are sufficient.)

  • State high-risk pools for plan or policy years that begin on or before December 31, 2014. (Starting in 2015, these types of plans also may or may not count as minimum essential coverage.)

If you have existing coverage that falls into one of these categories, you’re likely good to go. If you don’t, keep in mind that insurance plans that provide only limited benefits, such as vision or dental care, don’t qualify as minimum essential coverage, nor do workers’ compensation or disability policies.

Even some Medicaid coverage, if it applies only to specific benefits such as family planning or pregnancy-related services, doesn’t suffice.

Qualifying for an exemption

Certain groups of people are exempt from the requirement that all individuals secure health coverage. Here are the exempt groups as of this writing:

  • People who are incarcerated

  • Members of federally recognized Indian tribes

  • People who are part of a healthcare sharing ministry or a recognized religious sect with objections to health insurance

  • Non–U.S. citizens, U.S. nationals, and resident aliens lawfully present in the United States

  • People who cannot qualify for Medicaid because their state has chosen not to expand the program

  • Anyone who cannot afford coverage, which means they would pay more than 8 percent of their household income for the lowest-cost bronze plan available to them through the Marketplace

  • People whose income is low enough that they aren’t required to file a federal tax return

You can file for an exemption on your state’s Health Insurance Marketplace or when you file your federal tax return. If you aren’t required to file a federal return, you are automatically exempt from the insurance mandate that year.

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