WASHINGTON, January 1, 2015 — The New Year brings more than hope in new beginnings; it brings us increased Obamacare-mandated fines that will be collected by the Internal Revenue Service.
The individual mandate to buy health insurance went into effect last year, and this April taxpayers will have to tell the IRS whether they had health insurance for the prior year and pay fines if they did not.
Supporters of the health care law have played down the penalties, instead emphasizing the availability of federal subsidies and the fact that insurers can no longer turn away people with pre-existing health problems, one of the most popular benefits of the law.
Americans, from the early days of the revolution to the present, do not like being told that they have to pay taxes to cover the debts and responsibilities of others.
According to Obamacare Facts, the penalties are payment of your “shared responsibility” and something you must do — taxation without representation, not unlike the English tea taxes, some may say.
The Shared Responsibility Payment for not maintaining Minimum Essential Coverage works like this: if you don’t obtain and maintain minimum essential coverage throughout the year, or obtain an exemption, you’ll have to make a Shared Responsibility payment for each month you went without coverage or an exemption. If you have coverage for at least one day within the taxable year, then you won’t owe the payment for that month.
You need to obtain and maintain Minimum Essential Coverage
To comply with the mandate, you’ll need to not only obtain coverage, but maintain it throughout the year unless you qualify for an exemption. Some exemptions only last a few months, others last for the full calendar year. You’ll owe the fee for any month you go without coverage or an exemption.
The penalties will heavily impact millions who, after the last six years of non-government progress:
- are unable to find the time to understand the laws; many people are working multiple jobs;
- do not have the money left over after paying for food, shelter and necessities to pay for the insurance;
- do not have access to Obamacare information; Obamacare heavily relies on persons having access to the internet to get information.
While 2014 fines were a modest $95 per person or one percent of the household income — whichever is greater — those Americans who have not signed up for Obamacare this year will find fines jumping to $325 per individual, or two percent of the household income.
Fox News reports that by 2016, the average fine will be about $1,100, based on government figures.
Obamacare’s demands and penalities were meant to be a catalyst to encourage individuals to join the insurance pool, thereby reducing premiums overall. However heavy fines just when Americans are seeing some relief in gas prices and economic gains will surely anger many who receive yet another bill, or don’t receive a tax refund come April 15.
Which may further harm economic recovery. In an April 2009 article (Tax Refunds Give Boost to Consumer Spending at WSJ.com) John D. McKinnon writes:
Internal Revenue Service data show that through April 3, total individual refunds were up by about 15%, to $210 billion, from $183 billion at the same point last year. That extra money in consumers’ pockets — coupled with a drop in gasoline prices — has helped keep consumer spending surprisingly healthy in recent weeks, economists say.
Government figures show that tens of millions of people still fall into the ranks of the uninsured, but how many of those will be assessed fines is not clear. The law offers about 30 different exemptions, most of which involve financial hardships.
Furthermore, it’s unclear how aggressively the IRS will go after the fines. We might be wise to assume they will be deducted from any refunds we might be relying on.
All this for a “shared responsibility,” which some may define as nothing short of America further slipping into a socialist society.
Based on congressional analysis, tax preparation giant H&R Block says roughly four million uninsured people will pay penalties and 26 million will qualify for exemptions from the list of waivers, Fox.com reports.
The Tax Policy Center reports:
In each year, the penalty is capped based on the national average premium for bronze level insurance plans for single individuals and the number of people in the insurance unit. Specifically, the cap equals that average premium times the number of people up to a maximum of five. The average bronze plan premium for 2014 and the projected premiums for 2015 and 2016 are:
For an explanation of how the average bronze plan premium was calculated for 2014, see IRS Internal Revenue Bulletin: 2014-33.
As difficult as using the healthcare.gov and state exchanges was, so will be applying for a waiver of the fees. You might be able to do so via your tax return, while other waivers will require sending in paperwork to the Department of Health and Human Services, yet another burden to overwhelmed tax payers.
The IRS claims to be taking steps to make sure taxpayers’ returns don’t get trapped “in bureaucratic limbo” while HHS rules on their waivers.
TurboTax has created a free online tool called “Exemption Check” for people to see if they may qualify for a waiver offering some relief, but there will be charges if the taxpayer files through TurboTax.
People also can get a sense of the potential hit by going online and using the Tax Policy Center’s Affordable Care Act penalty calculator.
February 15 is the last day of open enrollment under the health law, a drop dead date that cuts off Americans from signing up after that date unless the person can prove “special circumstances”.
A Kaiser Family Foundation poll say that less than 5 percent of Americans know of this deadline.
“We could be looking at a real train wreck after Feb. 15,” Stan Dorn, a health policy expert at the nonpartisan Urban Institute told FoxNews.com. “People will file their tax returns and learn they are subject to a much larger penalty for 2015, and they can do absolutely nothing to avoid that.”
In a decision that allowed Obama’s law to advance, the Supreme Court ruled in 2012 that the coverage requirement and its accompanying fines were a constitutionally valid exercise of Congress’ authority to tax.
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