CHA News Article

Report Examines Cost of Individual Mandate Penalty for Remaining Uninsured

The Kaiser Family Foundation has released a report that examines how strongly the Affordable Care Act’s individual mandate penalty will encourage uninsured individuals – particularly those who are healthy – to obtain coverage, boosting enrollment in the marketplaces and improving the insurance risk pool. Titled The Cost of the Individual Mandate Penalty for the Remaining Uninsured, the analysis provides estimates of the share of uninsured individuals eligible to enroll in the marketplaces who will be subject to the individual mandate penalty, and how those penalties are increasing for 2016. To assess how effective the individual mandate may be in increasing marketplace enrollment, the study looked at increasing penalties for people who were uninsured in early 2015 and who are marketplace eligible.

Key report findings reveal:

  • An estimated 78 percent of individuals who are uninsured and marketplace eligible would be subject to the individual mandate penalty if they remain uninsured in 2016, including 75 percent of individuals who are eligible for premium subsidies and 84 percent of individuals who are not.
  • Among individuals who were uninsured in early 2015 and eligible to enroll in the marketplace, the average household penalty in 2016 is $969. This is up 47 percent from the average 2015 estimated penalty of $661. Those who are eligible for premium subsidies will face an average household penalty of $738 in 2016, while the average household penalty totals $1,450 for uninsured individuals not eligible for any financial assistance.
  • About 7 million uninsured individuals are eligible for marketplace premium subsidies and are a key target group for increasing marketplace enrollment. Almost half (48 percent) of them could buy a bronze plan for a zero premium contribution or for less than the penalty they would owe for remaining uninsured, including 28 percent who could buy a bronze plan using their premium subsidy for a zero premium. However, bronze plans come with high deductibles and low-income enrollees may be better off financially enrolling in silver plans that have higher premiums but are eligible for cost-sharing subsidies.
  • Of almost 11 million uninsured individuals who are eligible to enroll in marketplace coverage either with or without financial assistance, 7.1 million would pay less for any penalty than they would to buy the least expensive insurance available to them.

The full report is available at www.kff.org/health-reform/issue-brief/the-cost-of-the-individual-mandate-penalty-for-the-remaining-uninsured/.

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