It has only been about a week since the Supreme Court declared that the Affordable Care Act was constitutional, and would stand. There are a lot of people who are confused about the individual mandate, and how that tax might affect them, and their families. Here are more facts about the health insurance tax.
Myth: The health insurance tax forces you to buy health insurance, even if you don’t want to.
Fact: No, the tax doesn’t require you to buy health insurance.
First of all, if you are already covered by a health insurance plan in 2014, and you like it, you can keep it. Those who have health insurance coverage don’t have to pay the tax. You are not going to be forced to purchase a brand new health insurance policy. You can choose to buy a different policy than the one you have, if you want to, but you are not going to be forced to do so.
Secondly, no one is being forced to buy health insurance, at all. You have a choice. If you feel that you and your family would have a better quality of life without having any health insurance coverage at all, you can elect to not buy health insurance. However, this will mean that you would have to pay the tax, instead. It is your choice.
Myth: Poor people, who can’t afford to buy health insurance, are going to be forced to pay the tax.
Fact: No, that isn’t how things will work. In 2014, households with an income of less than 400% of the federal poverty level will be eligible for a subsidy. The subsidy is to be used to help you pay for health insurance. It will come in the form of a refundable tax credit. The lower your income is, the larger a subsidy you will receive.
Not sure if your income is less than 400% the federal poverty level? The Kaiser Family Foundation has a really handy Health Reform Subsidy Calculator that can help you to figure that out.
The only people who will have to pay the tax are the people who truly can afford to buy health insurance coverage, and who are making the choice not to buy it. According to the Urban Institute, only about 6% of the population will actually end up having to pay the health insurance tax.
Image by 401K 2012 on Flickr