10/22/2012 9:30 PM ET|
How Obamacare penalty will work
Under health care reform, some people without coverage will owe the IRS starting in 2015. Here's a guide to the new rules.
Beginning with their 2014 federal taxes, many consumers who can afford health insurance but decide not to buy it will owe penalties to the Internal Revenue Service when they file their taxes in early 2015. There will likely be repeated efforts to overturn this and other provisions of the Affordable Care Act, also referred to as Obamacare. But the Supreme Court decision to uphold the law's constitutionality this past summer has greatly increased the odds that the so-called individual mandate to have health insurance will be implemented over the next two years.
The nonpartisan Congressional Budget Office has estimated that roughly 4 million people will choose to pay a penalty each year instead of purchasing health insurance. This group is expected to be dominated by younger Americans without children who feel they are healthy enough to forgo insurance. Those penalties will be small in 2014 and 2015 before rising to their full levels in 2016.
Due to expected confusion in the early years of the program, more people may face penalties. But it's unclear what will happen if they don't pay them. The Affordable Care Act forbids the IRS from making aggressive efforts to collect the penalty from people who don't pay. The biggest stick the agency may have is withholding tax refunds from those who owe penalties.
Insurers are required to send out notices of health coverage that will, over time, become as routine as a taxpayer's W-2 statement of taxable wages. The 2014 notices are due to consumers and the IRS by Jan. 30, 2015. But this process may experience its own learning curve, and few people are predicting that a flawless reporting system will be in place right away.
The three major parts of the individual mandate rules are:
- Understanding the nonfinancial grounds on which people are excluded from having to get insurance.
- The income provisions affecting the need to be insured.
- The penalties themselves.
The mandate is designed to apply to people who make enough money to buy private health insurance but choose not to be insured on their employer's plan, in the individual market or through the insurance exchanges that must be set up in each state under the law. The mandate does not apply to Americans age 65 and up who are covered by Medicare.
There is a long list of people who do not have health insurance but will not face a penalty on nonfinancial grounds. They include people who:
- Are between jobs and without insurance for up to three months.
- Have religious objections.
- Are undocumented immigrants.
- Are in jail.
- Are members of an American Indian tribe.
The financial tests to avoid a penalty include having family income that is too low to require filing a federal tax return. Using 2010 rules, this would be less than $9,350 for an individual and $18,700 for a family.
Higher-earning households may also be exempted from the penalties if their out-of-pocket cost for private health insurance is more than 8% of their taxable income. This amount is for any additional cost after subtracting employer health care insurance contributions.
The amount also takes into account any health insurance subsidies available as tax credits through the state insurance exchanges being created by the act. A report from the CBO and the staff of the congressional Joint Committee on Taxation issued in March estimated that consumers who qualify for subsidies using state exchanges will receive an average benefit of $4,780 in 2014, $5,040 in 2015 and $5,210 in 2016. This benefit is mostly for the tax credits but also includes other support items, according to a Treasury Department spokeswoman.
Those credits are keyed to the nation's financial poverty guidelines. These are set each year by the government and adjusted annually based on changes in the Consumer Price Index. The exchanges will offer a sliding scale of insurance subsidies that extend to incomes as high as four times the poverty guidelines.
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Are they going to be exempt until they come back? There should be a way of putting a plan on hold with a minimum fee don't you think?
I guess we're just going to have to pack up the RV and go join or start an Indian tribe at some point in the future!
(I can just see the overseas headlines many years from now: Majority of US citizens all now Indians and staking claims on their former lands; US government's IRS now "cowboys", working for China attempting to repay the US debt from few remaining big insurance companies who now own what is left of the country.)
13/000 pages of regulation already from just 28 pages of the bill. estimated costs up to $2.8 trillion from $900 billion over 10 years, thousands of exemptions for the politically connected, especially unions, 500 billion to be pulled from Medicare to provide infrastructre to administer the program, not medical care, estimated 13 new government agencies to administer te program with 130,000 new govt jobs, 16,000 new IRS agents, doctors leaving the profession, downward enrollment in med schools, fewer doctors taking ANY form of insurance et etc..
In 10 years, you will be lucky if you can see a vet for basic care and physicals.
With being self employed, you would have to purchase private insurance for yourself anyhow. You, yourself, would have to pre-determine the amount of tax, like a company with an accountant, and put it away to pay them at the end of the year. You are your own employer..which if you went to any company, Your "employer" would offer you insurance. And I believe EVERYONE has hardships, and more than you can speak of them. I used to be able to stay at home with my children. My husband had a job with the same company for 18 years. We had insurance, could pay our bills, and go to a movie ever so often...have pizza, just a few fun moments a month as long as we planned carefully. He lost his job...and insurance, etc. And for the first time in 10 years, no insurance..NO MONEY. It took 3 weeks for unemployment to kick in, and it made more sense for my family for me to find work to make up the difference (which was insurance) I worked for 5 months till I became eligible for insurance. After insurance, I brought home a 50.00 check twice a month. So no one here can say no one knows what "working their rear end off here is" unless your just lazy, on drugs and cant pass a urine test. Because even burger king is teaching others to flip a burger. I have no idea what its like to work for yourself, Im sure its seasonal work (comes and gos) but I do know what it means to work past the exhaustion stage to care for my family.
Have you ever been self emloyed? I don't think so lol. We work our a## off put in 80 hour weeks instead of 40, Don't get any paid time off, Don't get any unemployment if we can't make it. I can go on and on. You talk out your a## about something you know nothing about.
Unreal! I am a 47 year old female who has worked all my entire life and have not seen a doctor in 5 years because I can't afford to! Now Obama wants to fine me for not having medical insurance and withhold my tax return from me if I don't have it?! OK, lets kick all the lazy welfare and illegal's out and take care of our own! I would love some free money and medical! I'm seriously thinking of leaving my country.
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