The bill makes significant changes to the ACA, including replacing the individual mandate penalty with a new penalty for failing to maintain continuous coverage. Both approaches are designed to insure that sick and healthy—as well as old and young—Americans pay into the insurance pool, which promotes affordability.
Under the ACA, the individual mandate imposes penalties on people who are uninsured for more than three months during the course of the year. Those penalties are adjusted based on income and are prorated based on the length of time an individual was uninsured.
As proposed in the AHCA, the continuous coverage requirement would apply a premium penalty for individuals who have a gap in continuous coverage of 63 days or greater over 12 months. The penalty is equal to 30 percent of the monthly premium and would last for 12 months, starting in calendar year 2018.
Because premiums are age adjusted, the penalty would be higher for older people and lower for younger individuals. Additionally, because the AHCA’s penalty is not tied to income, low-income individuals will pay significantly more under the AHCA’s penalty, compared to what they pay for not having insurance under the ACA....
AvalereHouse of Representatives ACA Repeal and Replace Legislation Could Increase Penalties for Failure to Buy Insurance
Caroline F. Pearson | Senior Vice President