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Minimum Coverage Provision

A short explanation of the Affordable Care Act's minimum coverage provision ("individual mandate") is available on our ACA Basics page. This page provides more information and resources.

Overview

Starting in 2014, the minimum coverage provision ("individual mandate") will require most U.S. citizens and legal residents to obtain and maintain coverage for themselves and their dependents, or to pay a small penalty. People can opt out if they qualify for one of numerous exemptions. The minimum coverage provision is necessary to keep our insurance markets balanced, and ultimately to keep costs low for everyone.

APHA and external resources are listed below.

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Public health professionals: Looking for resources to help you educate your community about the Marketplaces and other ACA reforms?

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Go back to the main page of the health reform section of APHA's website for resources and links to the official websites of the ACA and the Health Insurance Marketplaces.

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Other frequently asked questions

 

1. What is the minimum coverage provision, and why not call it the individual mandate?

2. What types of coverage will satisfy the requirement?

3. What will the penalty be?

 

4. What are the exemptions?

5. How many people will be directly affected by the provision?


6. If only a small portion of the population will be directly affected by the minimum coverage provision, why is it so important?


7. What did the Supreme Court say about the minimum coverage provision?

 


1. What is the minimum coverage provision, and why not call it the individual mandate?

Starting in 2014, the minimum coverage provision ("individual mandate") will require most U.S. citizens and legal residents to obtain and maintain coverage for themselves and their dependents, or to pay a small penalty. People can opt out if they qualify for one of numerous exemptions.

While this provision is more commonly known as the "individual mandate," that term is not accurate, and does not appear anywhere in the ACA. The provision is not a mandate, because people have the option of paying a penalty instead, and because there are numerous exemptions. (FAQ top)

 

2. What types of coverage will satisfy the requirement?

Examples of coverage that individuals may obtain include employer-based insurance; individual insurance purchased through the exchanges; or public insurance such as Medicaid, Medicare, or CHIP. (FAQ top)

3. What will the penalty be?
The penalty will be the greater of a flat fee or a percentage of income ($695 or 2.5 percent of taxable income for an individual, capped at three times that amount for a family) and it will be phased in over 2014-2016. It will be assessed as part of peoples’ income taxes. (FAQ top)

 

4. What are the exemptions?
There are numerous exemptions, including: having income below 100 percent of the federal poverty level; not being required to file income taxes; if the purchase of insurance would cause financial hardship; having religious objections; having a coverage gap shorter than three months; or being an American Indian, undocumented immigrant, or incarcerated person. (FAQ top)

 

5. How many people will be directly affected by the provision?

Most people will not directly be affected by the minimum coverage provision, because they already have employer-based coverage, or other coverage such as Medicaid or Medicare, that meets the minimum coverage requirement; or because they are exempt. A March 2012 analysis by the Urban Institute found that of the nearly 270 million non-elderly individuals in the U.S., only 7 percent would “face a requirement to newly purchase insurance or pay a fine.”

  • Of the nearly 270 million non-elderly individuals in the U.S., nearly 160 million already have coverage, and another 90 million would be exempt for one of the reasons noted above. Thus, they would not be directly affected by the provision.
  • Only 26 million people are both currently uninsured and wouldn’t be exempt, and would thus be affected by the requirement to obtain coverage.
    • However, within this group, 8 million would be eligible for no-cost or low-cost public insurance (such as Medicaid or CHIP), and would not necessarily have to purchase their coverage.
    • Another 11 million would be eligible for subsidies to purchase coverage through the new exchanges. Only about 7 million people would be subject to the minimum coverage provision, but would not receive any public coverage or exchange subsidies. The Urban Institute’s estimate that 7 percent would face a requirement to newly purchase coverage or pay a penalty includes these 7 million, and also the 11 million that would receive subsidies.
  • These estimates were published before the Supreme Court ruled on the ACA in June 2012, and if fewer states now choose to expand Medicaid, there will likely be more people who must "newly purchase" coverage, with or without a subsidy. However, many of those who now won't qualify for Medicaid may be exempt for income or other reasons. (FAQ top)

6. If only a small portion of the population will be directly affected by the minimum coverage provision, why is it so important?

While the minimum coverage provision would directly affect only a small percentage of the population, it is a very important part of the health reform law. It will make many other ACA provisions possible, by ensuring that insurance markets stay balanced and costs stay low.

Because so many other ACA reforms, particularly guaranteed issue and community rating requirements, will protect consumers’ right and ability to purchase insurance, it’s important to ensure that individuals don’t take advantage of the new system by choosing not to buy insurance as long as they’re healthy, and only buying coverage when they become sick. If too many individuals were to do this, costs would rise for both insurers and consumers who do have coverage. The minimum coverage provision is necessary to provide an incentive for everyone – including healthy individuals – to pay their fair share, keep the system balanced, and keep costs low for everyone. (FAQ top)

7. What did the Supreme Court say about the minimum coverage provision?
The minimum coverage provision was one of two major ACA provisions at stake in the legal challenges decided by the Supreme Court in June 2012. The Court upheld the minimum coverage provision, and the Medicaid expansion (although its decision on the Medicaid expansion was more complex). For more information, see our Supreme Court Decision page. (FAQ top)


Resources

For more information, visit our Supreme Court Decision page or our Useful Links page.

APHA is continuing to update its health reform website and resources. Please check back as we add new content.   

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