New legislation regarding health insurance changes has created complex and sometimes confusing rules. One section of this new law that can be difficult to understand is the new health insurance mandate. Eligibility for insurance mandate qualifications and restrictions are a particular source of complication for some people. In effect this mandate requires that everyone have some type of health insurance coverage. Ignoring this law will result in a fine or penalty that increases over time. However, there are exceptions that could exempt a certain section of the population from having to participate.

First, if you currently have health insurance coverage there are no changes required. Nothing in the new health insurance mandate affects current coverage of any kind. This bill from Congress is simply meant to cover people who have no insurance. Second, if your annual income is considered to be below the poverty level you can choose to opt out of the required coverage. In effect, eligibility for insurance mandate coverage is null and void. This applies to each individual, not as a family. The third way to avoid purchasing health insurance is if the cheapest policy is more than 8% of your annual income. Again, this applies at an individual level. For example, if your yearly salary is $25,000 and the lowest priced policy is more than $2,000 you are not required to participate in the new mandate.

Not purchasing health insurance will result in a penalty or fine. At first this penalty is nominal at $95 or 1% of your annual income in 2014. However, legislation exponentially increases the fine to $695 or 2.5% of your annual income, two years later in 2016. This could be a substantial fine; however, in some instances the fine could be cheaper than actually purchasing health insurance for a year. Essentially, this could be a fourth way of not participating in the new mandate.

Because the new insurance mandate takes effect in 2014, this gives everyone ample time to purchase some type of policy. Experts predict that new low cost insurance group policies will be created to offer affordable insurance to lower income groups. The better option is to seek insurance coverage from an employer based plan. These are usually the most affordable and effective options.

Health insurance reform has long been a top goal for Congress. Having everyone participating in some type of health insurance coverage is the target for the health insurance mandate. Interestingly, this law only affects a small percentage of the entire population but has created confusion and consternation with among a large portion of the country. It is important to understand if you are affected by the new law and in what ways.