Hate it all you want, but insurance -- life, auto, homeowners/renters, health -- can mean the difference between economic survival and personal financial disaster.
The Internal Revenue Service last week issued final rules for the personal mandate section of the Affordable Care Act, detailing in 75 pages to whom it applies, what types of policies qualify and who gets government assistance in paying for premiums.
The mandate differs little from the requirement in many states that drivers must carry liability insurance in case they have an accident -- although there's no subsidy for that. Failure to do so means license plates or drivers' licenses will not be renewed when the time comes. Squawk if you want, but the other guy's coverage could determine whether your costs will be covered. Banks require homeowners to have insurance in the case of catastrophic loss so the rest of the mortgage will be covered.
The logic behind the individual mandate in the ACA is little different. It means the rest of us won't bear the costs of an uninsured person's trip to the emergency room -- which currently is built into medical costs.
The difference between the ACA individual mandate and the other forms of required coverage has to do with who is demanding it. ACA is federal; other insurance requirements are governed by a patchwork of state laws -- and therein lies the rub. Conservatives just don't like the federal government telling them what to do as evidenced by the 40 times the House has voted to repeal Obamacare, as the ACA is derisively known.
Does anyone really want to roll back the provisions that allow parents to keep their children on the family policy until age 26 and require carriers to cover people with pre-existing conditions?
But a funny thing happened en route to full implementation. First came the sequester, which forced the federal government to suspend for a year requirements that all-but-the-smallest employers offer healthcare plans because of the mechanics of setting up a reporting mechanism. And then the Treasury Department last week estimated the United States will reach its borrowing limit sooner than expected in mid-October instead the end of the month and will only have about $50 billion on hand any given day to pay bills, which could put a crimp in the government's ability to meet obligations. The White House has said President Obama won't negotiate with Congress over raising the debt ceiling (translation: the White House won't agree to defund the ACA in exchange for an increase in the debt ceiling).
As of Jan. 1, the ACA requires everyone to have at least minimum coverage. In just six weeks, the state health insurance marketplaces are to be open for business. But only 18 states and the District of Columbia have opted to set up their own exchanges, with seven others establishing partnerships with the federal government and 25 opting to let the federal government handle the whole shebang.
And President Obama has warned there will be glitches.
The newly unveiled IRS rules say any plan sold within a state, along the Medicaid and Medicare, pretty much complies with the minimum coverage requirement and companies can go to the insurance exchanges to pick a plan to offer employees. People who refuse to buy coverage will have to pay a fine: $95 in the first year or 1 percent of taxable income. In 2015, the fine goes to $325 or 2 percent of taxable income and in 2016, it goes to $695 or 2.5 percent of taxable income. Taxpayers also are liable for 2 dependents. After 2016, fines will go up based on inflation. Still, it's cheaper than many insurance premiums that easily run into the thousands of dollars and have been increasing at rates far exceeding inflation.
There are no criminal penalties attached to flouting the individual mandate but that expected tax refund can go bye-bye.
Those 55 and older with incomes of $46,000 to $97,500 may be exempt from the mandate if the cost of insurance tops 8 percent of household income. Those earning less than $46,000 are eligible for subsidies. Those earning less than the poverty level -- $11,945 for individuals and $44,387 for a family of eight -- also are exempt. The two categories cover about 40 percent of the currently 45 million uninsured, ACA designer Jonathan Gruber has estimated.
American Indians and members of certain religious sects also are exempt.
Sen. Ted Cruz, R-Texas, a possible 2016 presidential contender, warned Tea Party activists last week there are only a few weeks left to kill healthcare reform. He said once the subsidies go into effect it will be too late because people will get accustomed to having the federal government pick up as much as 70 percent of the premium tab and won't want to give it up.