What Is the Individual Mandate?

Definition

The individual mandate was the provision of the Patient Protection and Affordable Care Act (ACA) that required most U.S. citizens and legal residents to have health insurance, either through an employer-sponsored plan, an individual plan, or a government program such as Medicare or Medicaid. The individual mandate was also referred to as the "shared responsibility payment" or the "healthcare penalty".

Background

The individual mandate was the cornerstone of the ACA's effort to expand health insurance coverage to as many Americans as possible. The mandate was designed to address the problem of "free riders," people who benefit from the healthcare system without paying for it. Insurers argued that free riders drove up the cost of health insurance for everyone else.

Implementation

The individual mandate was implemented in 2014, and individuals who did not have health insurance were subject to a tax penalty. The penalty amount varied depending on income, and it increased over time. For 2014, the penalty was $95 or 1% of taxable income, whichever was greater. For 2016, the penalty was $695 or 2.5% of taxable income, whichever was greater.

Repeal

The individual mandate was repealed by the Trump administration in 2017. The repeal of the individual mandate has left the future of the ACA in doubt. Without the mandate, it is possible that millions of Americans will lose their health insurance coverage, and the cost of health insurance is expected to increase.