What are the requirements and how do I comply to avoid the penalty?
Mandated by the Affordable Care Act, nearly every American will be required to purchase or be covered by some form of a qualified medical insurance plan in 2014-there are a few exceptions. As of March 31, 2014, which is the end of open enrollment, if you are not covered by a qualified medical insurance plan you will pay a penalty/fine or tax.
Individuals in 2014: The Penalty is the Greater of 1% of Income or $95 Per Person
For individuals, the annual penalty starts at the greater of 1% of your annual income or $95 per person. Each year, the penalty will increase.
In 2014, the penalty is marginal. However, each year it increases. It is important that the entire country participate as the premiums are intended to offset the risk of insuring all Americans, regardless of pre-existing conditions. As previously stated, medical underwriting goes away as of 2014. In other words, no person can be denied or declined for any pre-existing conditions.
Penalty for Businesses of 50+ Employees: $2,000 Per Employee Per Year
In California businesses with less than 50 employees are not required to offer health benefits to their employees. This will not change in 2014. However, larger companies with 50 or more employees are required to offer health benefits to their employees. The new maximum waiting period for a newly hired employee goes down to just 60 days.
If an employer with more than 50 employees chooses not to offer group health insurance coverage, a penalty of $2000 for each full-time equivalent employee would be accessed. There is a calculation for part-time employees as well adding up to full-time status. Additionally, if an employer does not offer group health coverage with minimum cost exposure to the employee (9.5% of their monthly gross income) the fines will be significant. Employers are being saddled with mandated benefits and higher costs, which will increase their cost of operations. How this will affect their cost of doing business is to be determined.
Note: Small businesses with fewer than 50 employees are not required to offer health insurance, so these companies are not subject to a penalty if they do not offer health benefits.