Report: Obamacare Penalty ‘Train Wreck’ Looms for Uninsured

Report: Obamacare Penalty ‘Train Wreck’ Looms for Uninsured

By Joel Himelfarb

Americans face mounting Obamacare-mandated penalties if they cannot prove to the Internal Revenue Service’s satisfaction that they had health insurance during the previous year, Fox News reports.

The law mandates a tax penalty of $95 per person or 1 percent of household income, whichever is more, for those who went without insurance during 2014. It increases to $325 for 2015 or 2 percent of income, whichever is higher. By 2016, the average penalty is expected to be about $1,100.

Government figures indicate that tens of millions of Americans remain uninsured. But it is unclear how aggressive the IRS will be in attempting to collect from those Americans deemed to be scofflaws.

The law currently lists about 30 different exemptions, most of them related to financial hardship.

The tax preparation company H&R Block recently projected that about 4 million uninsured people would be forced to pay the penalty and that roughly 26 million would qualify for exemptions.

But taxpayers need to be sure they are seeking the correct kind of waiver. Some involve mailing paperwork to the Department of Health and Human Services while others can be obtained directly on a tax return. TurboTax has created a free online tool called “Exemption Check” for people to see if they may qualify for a waiver.

Another way to calculate the amount of the tax penalty is through the online Affordable Care Act penalty calculator set up by the Tax Policy Center, a project of the Urban Institute and Brookings Institutions, two liberal-leaning research organizations.

Timing also will be critical for the uninsured people who want to avoid the rising tax penalties for failing to have health insurance during 2015. That is because under the law, Feb. 15 is the last day of open enrollment except for individuals with “special circumstances.”

But just 5 percent of the uninsured are aware of the correct deadline date, according to a Kaiser Family Foundation poll released earlier this month.

“We could be looking at a real train wreck after Feb. 15,” said Stan Dorn, a health policy expert at the Urban Institute. “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.”

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