Individual Mandate / Exchange

By January 1st, 2014, the ACA requires that individuals purchase health insurance or they will be subject to a penalty. Some individuals have not been able to purchase insurance in the past due to health conditions. In 2014, all individuals will be eligible for health insurance regardless of health status, also known as Guarantee Issue.

One place individuals will be able to go to purchase health insurance is on the exchange. North Carolina opted not to create a state-based exchange, but to let the federal government create a federally-facilitated exchange. Private insurance companies will sell their insurance coverage on the exchange, but the plans must meet certain criteria to be a qualified health plan:

  • Must cover Essential Health Benefits
  • Conform to cost sharing limits and metallic levels
  • Utilize a standard application that will determine eligibility for either a premium tax credit or a cost sharing reduction

The premium tax credit and cost sharing reduction will be determined by the household income and whether or not that income is less than 400% of the federal poverty level. A family of 4 with a household income under $94,200 would be below the 400% federal poverty level. There is a belief that many individuals and families will qualify for a subsidy of some sort. The amount of subsidy varies based on household income. See the below chart for an illustrative summary (please note, chart is for illustrative purposes only and the information subject to change).


The penalty for not purchasing coverage:

In 2014, the penalty for not complying with the individual mandate to purchase health insurance coverage is the greater of $95 or 1% of an individual’s income.

This penalty will continue to rise annually, and in 2016, will be the greater of $695 or 2.5% of the individual’s income.