We’ll return to Health Insurance Issues With Dave after this quick ethics test:

You are standing at the corner of Mayfield Road and SOM Center at 2 AM.  The light is red and the crosswalk sign is against you.  There isn’t a car in sight.

  1. Do you cross the street?
  • Yes
  • No

Three people cross the street, two not even bothering to come to the corner.  A police car drives by and doesn’t stop to even warn the scofflaws.

2.  Do you cross the street now?

  • Yes
  • No

The above is brought to you courtesy of the U.S. Government and your friends at the Internal Revenue Service.  Would you like to rethink your answers?

The Individual Mandate is a core element of the Patient Protection and Affordable Care Act (PPACA).  The requirement of universal participation is an important component of any serious proposal that would extend coverage, without underwriting, to everyone.  It is an unfortunate part of human nature that many people would opt out of coverage until 5 minutes AFTER they suffered a major accident or experienced chest pains.

It is only under the threat of penalty that some people feel compelled to act responsibly.

Americans were required to have health insurance in 2014.  And not just any insurance.  Compliant, approved insurance.  The penalty free options for someone under 65 in 2014 were:

  • Employer provided group health policy
  • Individual policy purchased on the Exchange with an effective date of January 1, 2014 or later
  • Individual PPACA compliant policy purchased off the Exchange with an effective date of January 1, 2014
  • Individual policy purchased prior to March 2010 – Grandfathered
  • Individual policy purchased with an effective date between March 2010 and December 31, 2013 – Grandmothered
  • Medicaid, Medicare, or Veterans Administration provided
  • Granted a Hardship Waiver from the government

The Grandmothered policies are the special contracts that fall under the “If you like your coverage you can keep it” compromises of 2013 and the spring of 2014.  We are good for another year on most of them.

Those are acceptable options.  If you have one of these you don’t have to pay the Shared Responsibility Fee that I just mentioned in the blog and client update last week.  Are you in compliance?

Line 61 on Form 1040 is of little help.  Health care: Individual responsibility (see instructions) Full-year coverage (___).  Unless you purchased a policy on the Exchange, the government has no idea whether or not you had a compliant policy.  We just learned this past week that the insurers will not be providing Form 1095B confirming compliant coverage in 2014.  As UnitedHealth Care stated in an update to agents:

“The IRS has indicated that taxpayers will not need specific documentation to “check the box” in good faith and avoid the shared responsibility payment.”

The IRS has to trust us to voluntarily confess non-compliance. 

This is not a big surprise.  As I noted several months ago, the forms needed to verify compliant coverage have yet to be created.  Too complicated.  Too many moving parts.

Did you have any health insurance in 2014?  Did you save money and purchase short term coverage for the year?  Time for that ethics test.  Will you turn yourself in when the possibility of detection is almost nil?

Instead of simply waiting a year to impose the Individual Mandate, the Obama Administration has chosen to collect from the intensely honest or the poorly advised.  And in the end that is the real ethics test.  And the government failed.




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