How To Comply With The Health Insurance Mandate When You're Unemployed

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It seems absurd: being required to buy something when you do not have the income to do so. However, that may be the case under healthcare reform. The individual mandate has been very controversial, but little has been said about its impact on the unemployed.


One would assume that there would be an exception for those who do not currently have a job. That would be inaccurate. According to the law, virtually everyone will be required to have insurance by 2014, regardless of their job status.


However, there are several solutions. Since the penalty for being voluntarily uninsured is assessed on your annual tax return, a person will not be subject to it if they fall below the filing threshold. In other words, his or her income is so low that the IRS does not require them to file a return. Currently, that is considered to be a yearly income at or below $9,350. With the essential expenses of food and housing, it is unfair to expect those far below the poverty level to buy health insurance.


Even if you earned a slightly higher income, there is still a chance of avoiding the penalty. If you can prove that the least expensive plan on the affordable health insurance exchange markets costs more than eight percent of your annual income before losing your job, you will be exempt from the mandate.


There are other ways of complying with the health insurance reform law's mandate. Medicaid eligibility will be expanded to adults making up to 133 percent of the federal poverty level, which was $14,400 in 2009. In that case, the government will fully cover your health insurance premiums.


Subsidies are also available through the exchanges. If you are unemployed, your eligibility for those subsidies will be based on an estimate of household income for the upcoming year, taking the loss of your income into account. That is a change from the normal process, which judges a person's eligibility through last year's household income, as stated on their most recent tax return. The alternate estimate is especially helpful for those formerly employed in high-wage positions that would have otherwise been ineligible under the standard calculation. With more generous subsidies, the unemployed may have to pay little or no out-of-pocket costs for their health insurance plans.