Obama Delays the Individual Mandate of Health Care Reform

Posted: November 06, 2013

By Esmeralda Mercado, Stephen Saucier, and John Hansen

Last week a proposed change to the Affordable Care Act was brought to the table by House Representative Daniel Lipinski, Democrat from Illinois, and approved by executive order by President Barack Obama. This proposal recommended that consumers would not have to pay a penalty as long as they submitted an application by March 31, 2014, which would result in coverage beginning on May 1st. What this means is that you will not have to pay a penalty even if you are uninsured for the first four months of 2014.

Prior to the mandate change, the Affordable Care Act required that you be insured no less than 9 months during 2014 in order to avoid the penalty. So anyone who was uninsured for more than three months was going to have to pay a hefty penalty. A penalty would not have been applicable so long as your coverage began by March 1st. You just couldn’t be without the “minimum essential benefits” for more than three months. However, now that the law has been revised, consumers have a little more breathing room.

In order to give people more time, some lawmakers asked President Obama to waive the penalty for those who have submitted their applications by March 31, 2014. If the mandate had not been delayed and things stayed as they were, you would have had to submit your application by February 15th (for a March 1st effective date). Since the proposal was accepted, you can now wait until March 31st to submit your application (for a May 1st effective date) and still avoid paying the penalty. This will give Americans 16 more days to enroll. Plus, it allows consumers to avoid paying health insurance premiums for one more month, since they can start their coverage on May 1st instead of April 1st.

The penalty is the greater of 1% of your annual household income or $95 per adult ($47.50 per child). And since the federal government won’t prorate the penalty, it doesn’t matter whether you’re uninsured for five months, nine months or twelve months in 2014, the penalty amount is the same. As it stands now, you can go without coverage for up to four months.

Below you can see a chart with some examples of dates, deadlines, and penalties.

Will I get a penalty or not?
If you submit your application by this date:	Your insurance will be effective this date:	You will be penalized (Yes / No):	Sample penalty based on a single adult with an income of $50,000:
December 15, 2013	January 1, 2014	No	N/A
December 16 – January 15, 2014	February 1, 2014	No	N/A
January 16 – February 15, 2014	March 1, 2014	No	N/A
February 16 – March 15, 2014	April 1, 2014	No	N/A
March 16 – March 31, 2014	May 1, 2014	No	N/A
April 1st or later (Note: After March 31, 2014, you must have a qualifying event to enroll.)	The first of the following month if you apply by the 15th	Yes	$500