The Patient Protection and Affordability Act of 2010 (PPACA), also known as Obamacare, contains a provision known as the “individual mandate.” The individual mandate is a directive that all individual American citizens have healthcare insurance or face a tax penalty. The IRS will be the executive agency in charge of enforcing the mandate.

What is the Current Status of the Individual Mandate?

After Senator McCain’s surprise “no” vote in August 2017, Obamacare and its individual mandate remain “good law.” Individuals are still required to purchase health insurance or pay a penalty. 

What Are the Consequences If I Don’t Have Health Insurance?

Failure to comply with the mandate in 2014 will result in an annual $95 penalty against the individual. This penalty can go up to $695 if the individual fails to comply in subsequent years. Families who fail to comply with the mandate can pay up to $2,085 per year.

However, the IRS is prohibited by the act from bringing criminal prosecutions against a person or family for failure to pay the penalty. The IRS is also prohibited from using liens or levies to enforce the mandate.

The only thing the IRS can do to a citizen who refuses to pay to the penalty is to add a penalty for failure to comply with the penalty to comply with the mandate. Each penalty for failure to comply with the penalty of the mandate will result in another $695 owed to the IRS. After that, the IRS is allowed to sue the tax evader in court.

How Will the IRS Enforce The Mandate? 

Beginning in 2014, the IRS will issue tax forms for the health insurance mandate. These tax forms will be similar to existing tax return forms. The IRS will also send corresponding tax forms to health insurance companies. Discrepancies between individual tax forms and insurance tax forms will be noted and penalized. 

What If I Can Only Afford Partial Coverage?

If an individual can only pay for healthcare coverage for certain months of the year, a penalty will be applied for each month that coverage lapses. The monthly penalty will start at $7.92 per month and then rise up to $57.92 per month as the mandate takes full effect.

How Do I Comply with the Mandate?

Since the goal of the PPACA is to ensure that all Americans have coverage, the mandate is fulfilled if an individual is covered by one of the following methods:

  • Qualifying for Medicaid as a single adult with an income of less than 15,000 a year
  • Entering Health Insurance Exchange Programs created by the PPACA if yearly income is over $15,000
  • Already Covered By Approved Existing Healthcare Insurance either through private or employer purchased insurance
  • Parental Coverage If the Individual is twenty-six years of age or under

Are There Any Exemptions?

Yes. There are a number of exemptions to the mandate:

  • Economic Inability – The mandate does not apply if paying for employer provided healthcare or the penalty would exceed 8% of the person’s income.
  • Economic Hardship – Persons under severe economic hardship, as defined by the Secretary of Health and Human Services, will be exempt from the mandate
  • Religious Exemptions – Individuals who are part of a recognized religious sect which consciously opposes acceptance of benefits from any insurance in the event of a death, disability, or retirement will be exempt. As of 2012, only the Mennonite, Amish, and Hutterite communities have successfully met all the requirements for exemption.

Do I Need a Lawyer If I Can’t Meet the Mandate?

Since the IRS has the power and the responsibility of enforcing the mandates, an experienced bankruptcy attorney can help you if meeting the mandate becomes a burden.