HEALTH CARE: Decision Time Nearing for Uninsured in Connecticut

By Olivero, Magaly | New Haven Register (New Haven, CT), September 10, 2013 | Go to article overview

HEALTH CARE: Decision Time Nearing for Uninsured in Connecticut


Olivero, Magaly, New Haven Register (New Haven, CT)


Time is running out for thousands of uninsured Connecticut residents who must decide whether to comply with a federal mandate to buy health insurance starting Jan. 1 or pay a penalty instead.

"We are undertaking a paradigm shift in how we think about health insurance," said Dan M. Smolnik, a tax attorney from Brookfield. "We don't know for sure how people in Connecticut will respond. But I think the majority will weigh the risks of not having health insurance and make a rational decision that isn't purely based on economics. People are smarter than that."

Known as the "individual mandate," the Affordable Care Act (ACA) requires most Americans who can afford coverage to buy insurance or pay the tax. About six million people will chose to pay a penalty each year instead of purchasing coverage, federal officials estimate. Foregoing coverage means consumers take the risk of being saddled with high health care bills, one of the primary reasons people declare personal bankruptcy.

Connecticut has an estimated 344,000 uninsured residents with Hispanics comprising 25 percent of those without health insurance, according to state officials. Experts expect about two-thirds of the state's uninsured will gain coverage under health care reform. Access Health CT -- the new online marketplace created by the ACA -- begins selling policies to all consumers on Oct. 1 with coverage effective Jan. 1, 2014. Residents with moderate and low incomes are eligible for tax credits and subsidies to offset the costs. Some individuals will be eligible for Medicaid under newly expanded eligibility guidelines.

"It's an exciting time," said Alison Flores, a senior analyst for The Tax Institute at H&R Block, which is helping clients determine their potential tax penalty and eligibility for tax credits and subsidies. "People are getting ready. They want to know what their options are from the new marketplaces (such as Access Health CT) and from their employers."

While every case differs, here's what you need to know about the penalty tax.

Who Must Pay The Tax?

To avoid paying the tax, individuals must purchase health insurance plans that cover at least 60 percent of their medical costs and include a minimum standard of care known as "essential health benefits" in 10 categories, including hospitalization, maternity care, mental health services, prescription drugs and more.

People who have health insurance through their employer, purchased coverage in the private market or are enrolled in government-subsidized health plans such as Medicare, Medicaid, Tricare (for military families) and the Children's Health Insurance Program are exempt because they already have coverage.

Individuals with financial hardships do not face the penalty, including those with incomes so low they don't need to file a tax return or whose coverage would cost more than 8 percent of their income. "Some people who think they may be liable for a payment may qualify for an exemption because they cannot find affordable coverage," said Flores.

Other groups exempted from the individual mandate include undocumented immigrants, Indian tribe members, individuals whose religion objects to health insurance, Americans living abroad, members of a health care sharing ministry and people in prison.

How Much Is The Tax?

The penalty for not having health insurance involves a flat fee based on the size of your household or a percentage of your taxable income, whichever is greater.

- In 2014, the flat fee is $95 per adult and $47.50 per child (capping at $285 for a family) or 1 percent of annual income, whichever is greater.

- In 2015, the penalty increases to $325 per adult and $162.50 per child (up to $975 for a family) or 2 percent of annual income, whichever is greater.

- By 2016, the tax is $695 per adult and $347.50 per child (capping at $2,085 for a family) or 2.5 percent of annual income, which ever is greater. …

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