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Rebecca Farley

Director, Policy & Advocacy, National Council for Behavioral Health

Most Uninsured May Be Exempt from ACA Mandate Penalty

August 12, 2014 | Health Insurance Exchanges | Comments
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According to a new report from the Congressional Budget Office and the Joint Committee on Taxation, nearly 90 percent of the 30 million U.S. residents who are uninsured will not have to pay a penalty under the Affordable Care Act’s insurance coverage mandate in 2016 because of a growing list of exemptions.

Under the health law, most U.S. residents are required to purchase individual coverage beginning this year or risk penalties of between $95 and 1 percent of their taxable income, whichever is higher. The penalties are scheduled to increase to $325 or 2 percent in 2015 and $695 or 2.5 percent in 2016.

The Obama Administration has provided a list of 14 ways people can avoid the fine based on hardships, including domestic violence and having a canceled insurance plan. Those come in addition to exemptions carved out under the ACA for groups, including undocumented immigrants, members of Native American tribes, and certain religious sects.

The Congressional Budget Office said the additional exemptions have lowered the total number of people who can be fined in 2016 under the law’s individual mandate from six million to four million. Also bringing down the total are the 21 states that have opted against Medicaid expansion for lower earners, and those residents may be exempt from the penalty. Overall, CBO estimated that 23 million U.S. residents will be exempt, and the government will collect about $4 billion in fines, down from an original estimate of $7 billion.

The number of exempted individuals could expand further depending on the outcome of a legal dispute as to whether the federal government is permitted to offer subsidies to ACA enrollees in states that are using federally-operated exchanges. About four million U.S. residents receive subsidies through federal exchanges in 36 states, and those people might be eligible for exemptions to the mandate should that subsidy coverage disappear, because coverage might then become unaffordable.