Individual Mandate in Reform

Under health care reform law, all people must have minimum essential coverage beginning January 1, 2014.

People have "minimum essential coverage" if they have a:

• Government-sponsored plan
• Employer-sponsored plan
• Individual plan

People can choose to buy health insurance on or off state insurance exchanges that will open in 2014. Some people can also get federal premium assistance on an exchange.

If a person cannot keep minimum essential coverage, the Internal Revenue Service will collect a tax penalty from him or her. The monthly tax penalty is described as 1/12th of the greater of:

• For 2014: $95 per uninsured adult in the household (capped at $285 per household) or one percent of the household income over the filing threshold
• For 2015: $325 per uninsured adult in the household (capped at $975 per household) or two percent of the household income over the filing threshold
• For 2016: $695 per uninsured adult in the household (capped at $2,085 per household) or 2.5 percent of the household income over the filing threshold

The penalty will be half of the amount for people under age 18.

There are a few exceptions to the penalty, including:

• Religious reasons
• Not present in the United States
• In prison
• Not able to pay for coverage that is more than eight percent of the household income
• An income that is below 100 percent of the poverty Level
• Having a hardship waiver
• Not covered for less than three months during the year