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Individuals

Individual Mandate And Penalties

Health care reform will have a major impact on everyone but especially on the millions of Americans who purchase insurance on their own, and for those who are uninsured.

If you fall into either of those categories, there are certain things you should know about health care reform. Most important is to understand the "individual mandate" to buy health insurance, which begins in 2014.

Health care reform requires all people to buy health insurance if:

The least affordable plan available to them costs no more than 8 percent of their monthly income, and
Their income is above the federal poverty line.

Those who fall within this requirement and don't buy insurance will pay a penalty - which will eventually grow to a maximum of $695 a year per person (up to a maximum of $2,085 per family) or 2.5 percent of income, whichever is greater.

The insurance industry has long supported an individual mandate. For health insurance to work properly everyone must be in the system. This allows risk - and costs - to be spread across the sick and the healthy, the young and the old. The individual mandate is thought to be the easiest way for this to happen.

Our biggest concern is that this individual mandate isn't strong enough. Because the penalties are so much lower than the actual cost of buying insurance, we think millions of Americans will choose to pay the penalty instead of their premiums.