Your Healthcare Guide

Why Do I Have to Buy Health Insurance?

Q: What will prevent employers from dropping health coverage for their employees?

A: In Massachusetts there is no employer requirement to have insurance, so employers can drop insurance. But guess what? They havent. In fact, when employers in the rest of the country were dropping insurance, there was a slight uptick in the number of employers in Massachusetts that offered insurance. Why? If you have an individual mandate, health insurance becomes very important to your employees, so its a great benefit to have.

In the federal law, companies with 50 or more employees who dont provide insurance are going to have to pay a penalty—as high as $2,000 per employee—if some of their employees go into the new health exchanges and get government subsidies. But the first 30 employees are exempt from that. And the penalty won't go into effect until 2015.

There's no mandate for employers with 50 employees or fewer to cover anyone, and there's no penalty if they don't. In fact, tax breaks will help some small employers pay for the cost of providing health insurance to their employees.

Q: What is the minimum amount of health coverage thats required to meet the mandate? Whats to prevent people from buying cheap, bare-bones plans?

A: Massachusetts requires fairly generous benefits. This includes things that you would want covered, like hospital services, physician visits, testing, and prescription drug coverage.

Federal legislation will require an essential health benefits package that provides a comprehensive set of services. Bare-bones, high-deductible plans will be discouraged. Catastrophic plans may be available for people under 30 years old who are exempt from the mandate because of income or hardship.

Existing individual and group plans are exempt from new benefit requirements, but will be required to adopt other features of the law, such as coverage for dependents and prohibitions against excluding preexisting conditions.

Q: How will the insurance mandate be enforced?

A: In Massachusetts, the individual mandate is enforced through the tax code. Your health insurer provides something in the mail similar to your W-2 that shows you have insurance, and you attach that to your tax return. Nationally, its going to be imposed through the tax code as well.

Next Page: Are some people likely to pay the penalty rather than purchase insurance?

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