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Friday, October 22, 2010

Expert Q&A: How do the penalties work?

Many of you have sent in questions about how the new health care law will affect you and your family. We’ve compiled answers for select questions to our experts in a short series to help you navigate changes to the health care system. Here's the latest:    

Question: How will the penalties for not having coverage be enforced? I already can't pay for coverage now—will I be fined or sent to jail if I don’t have health insurance?

Answer: The Patient Protection and Affordable Care Act (or “Affordable Care Act”) is designed to make sure that people who can afford health insurance obtain it and that those who can’t afford it receive help to make it affordable for them. So, if you earn less than or $43,320 as an individual or up to $88,000 for family of four, you may be eligible for a subsidy to help you pay for coverage.

The law does include individual responsibility requirements that can result in fines for not having coverage—but only if coverage is affordable for you and you still don’t obtain it. If there is no affordable health insurance option for you, you are exempt from having to pay any fines. Specifically, the Affordable Care Act says that if health insurance would cost you more than 8 percent of your income (which, for a person earning 400 percent of the federal poverty level, or $43,320, would be $3,466 a year, and less for people with lower incomes), you are not subject to any fines if you don’t have health insurance. Additionally, even if health insurance would cost you less than 8 percent of your income, if you have suffered a hardship that makes it financially or otherwise impossible for you to get and maintain coverage, you may also be exempt from fines. In no situation under the law can a person be charged criminally or be sent to jail for not having health insurance. Other exemptions from the individual responsibility requirements include those based on religion, being incarcerated, or being a member of an Indian tribe.

By making sure that those who can afford to buy health coverage do so and helping those who can’t afford coverage obtain it, the Affordable Care Act will make sure that as many people as possible have health insurance. This will keep people out of expensive emergency rooms when they need care and control costs in our health care system for everyone.

Claire McAndrew is a Health Policy Analyst at Families USA, a nonprofit, nonpartisan organization striving to achieve quality, affordable health coverage for all Americans. For more information, visit