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Jul 8

Employer Health Insurance Mandates – Fees, Fines and Penalties

In an overall effort to insure more Americans, “pay or play” mandates appear to be a part of the Obama administrations health care reform efforts.  While this legislation is still in its infancy, it is moving quickly as Congress attempts to draft a bill before summer recess.

Mandates already exist in the State of Massachusetts, but this legislation would encompass the entire country – affecting employer based groups as well as individuals. Accessing fines to those who are non-compliant should work well to get more individuals, families and groups insured, but it is unclear as to whether this will lower the overall cost of health care.

How Much is the Employer Health Insurance Fine?

Should this legislation pass, employer based groups with 50 employees or more not offering group health insurance would be fined $750 per year per employee.  Any collected fines would be theoretically paid to the federal government and used to subsidize health care reform measures.

How Much is the Individual Health Insurance Fine?

Individuals without medical coverage would be accessed a fine ranging from $250-$1000 dollars. At this time, the penalty amount is unclear although most agree that the fine would be closer to $250 per year.  Those with low income or who are considered hardship cases would be exempt from the penalty or otherwise be subsidized through government programs.

Insurers Must Cover Preexisting Conditions

Legislation would also force health insurance carriers to offer insurance to all regardless of any preexisting conditions.  Health insurers would no longer be allowed to choose only the healthiest of Americans to insure.  In a nutshell, applicants could no longer be declined due to poor health history.

Government Health Exchanges

Additionally, either a government run insurance option or so-called health exchange could be part of any bill.  This proposal has met strong backlash from Republicans and private health insurance carriers alike as worries mount over tax payer costs and the ability for private insurers to compete.  Another option proposed would be to create a non profit insurance carrier to compete with private companies.

It is difficult to guess what the final draft will look like as health care reform legislation passes through the House, Senate and ultimately to the President, but it is sure to contain mandates, fines and/or penalties of some kind.  Most likely, employer groups who do not currently offer insurance to their employees will need to move quickly in order to become compliant.  Individuals and families will have more options to purchase health insurance from either private, public or non-profit carriers.

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