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A Look at Health Care Reform

Understand the Requirement to Buy Insurance

Understand the Requirement to Buy Insurance

Guaranteeing everyone health insurance coverage is one of the most important parts of the ACA. This concept works only when everyone is required to buy insurance.

Here’s why this works:

By guaranteeing that anyone can buy insurance, many experts think more sick and unhealthy people will join the insured pool. These less healthy people will need and use health care services the most. Since insurance premiums are based on the entire pool’s costs for using health care services, as these less healthy people drive up the overall pool’s costs, premiums will rise in response to their health care usage.

To balance out these higher costs, it’s vital that younger, healthier people be added to the pool of insured people. Younger, healthy people often don’t think they need health insurance. To get them into the pool, the law requires everyone buy a plan that covers enough to be considered a qualified plan. Anyone who chooses not to buy health insurance will be penalized with a new tax.

By 2016 the tax will be $695 or 2.5% of your household income. There will be a phase-in period in 2014 and 2015, with a lower tax penalty, but the financial risk if you live without health insurance could be much greater than the penalty. One serious injury or illness could amount to tens of thousands, even hundreds of thousands of dollars in medical expenses that you’d be responsible for paying without insurance.

To keep people from waiting to buy insurance until they get sick or injured, the ACA specifies a limited time for people to buy a plan. During a period of time called Open Enrollment, there will be a two-month period each Fall when people can buy or switch plans. For 2014, the Open Enrollment period will be an extended six-month period running from October 1, 2013 to March 31, 2014. With only a few exceptions, Open Enrollment will be the only time you can buy a policy.