On March 23, 2010, President Barack Obama signed the Affordable Health Care for America Act and today the most controversial element of the new law, requiring individuals to purchase health insurance, was upheld by the Supreme Court.
Although the Supreme Court ruled that requiring people to have health insurance violates the Constitution under the commerce clause, the mandate will stay as part of Congress’s power under a taxing clause. In short, the mandate is constitutional and the government will be allowed to tax people for not having health insurance.
In its ruling the Court stated, “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness”.
For now the predictions about how the act will affect all Americans remain in place and include the following key points:
- Â The Uninsured. In 2014, the penalty will be $285 per family or 1% of income, whichever is greater. By 2016, it goes up to $2,085 per family or 2.5% of income.
- The Insured. Americans that are insured may be avoiding a spike in premiums, which would have likely resulted if the court had thrown out the individual mandate.
- Individuals with Pre-Existing Conditions. Beginning in 2014, the law makes it illegal for any health insurance plan to use pre-existing conditions to exclude, limit or set unrealistic rates on coverage.
- Small Business Owners. As of 2014, under the law, small firms with more than 50 full-time employees would have to provide coverage or face fines.
Unanswered questions remain undoubtedly, and the future of the health law is now dependent upon which party controls the White House and Congress after elections in November.
By: Katie Mokry, Accountant
William Vaughan Company Blog 