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How Obamacare Penalties May Affect Arizona

Obamacare or the Affordable Care Act remains a controversial topic in Arizona. As its full implementation draws near, many wonder how ignoring the provisions might affect them. One word: penalties.

Even though Obamacare encourages insurance coverage, many individuals, as well as employers, are still hesitant to comply with the requirements. In fact, the Congressional Budget Office estimates roughly six million people will choose to pay Obamacare’s penalties rather than obtaining health insurance.

For individuals who do not obtain insurance, penalties will be assessed. The same goes for employers, who must insure their workers or pay a tax if they have more than 50 employees working at least 30 hours per week. Below highlights the provisions for both.

Beginning in 2014, individuals must have eligible insurance that covers at least 60% of the average person’s medical costs. Policies must also include certain categories of benefits, ch as health, maternity care, and hospitalization.

Families without eligible insurance will pay $95.00 per adult and $47.50 per child, up to $285 for the entire family or 1% of income above the filing threshold, whichever is greater. In 2015, those amounts increase, rising even more in 2016. For any month without coverage, individuals will pay a twelfth of the penalty amount; however, individuals can have up to a three-month gap in coverage without incurring a penalty.

To be exempt from penalties, families must must have a total income below the threshold for filing tax returns. Although these parameters have not been set for 2014, the current exemption would be $10,000 for individuals and $20,000 for families.

Likewise, if employers fail to provide insurance, they could face annual penalties of $2,000 per worker, with an exemption for the first 30 employees. If they do offer insurance but it is deemed “unaffordable” for the worker — meaning it costs more than 9.5% of household income — then that worker could receive tax credits to help pay for insurance coverage. This would result in a penalty provision of $3,000 per subsidized worker, not exceeding the cost if an employer did not offer insurance at all.

For more information on Arizona insurance and Obamacare penalties and how they might affect your Arizona insurance policy, contact an agent today.