Individual Mandate

Guaranteeing that everyone has the ability to purchase insurance coverage will increase the pool of insured patients with high medical costs and, therefore, increase healthcare premiums. Higher premiums, in turn, might cause healthier individuals to opt out of health insurance, thereby causing additional increases in premiums until coverage becomes unaffordable. To minimize these negative implications, all individuals in the market must purchase healthcare insurance. According to the ACA provision, each individual is required to buy insurance coverage or face tax penalty. The penalty, which will not apply to any person who remained uninsured for less than three months, is the greater of: a flat dollar amount or a percentage of household income (see table below).

Table: Individual mandate penalties (Source: McDonough JE. Inside National Health Reform. University of California Press. 2011 page 123.)