IRS Caps Fines on Uninsured Americans at $12K for Family of 5
FRIDAY, July 25, 2014 -- U.S. taxpayers who go without health insurance this year will face fines of up to $2,448 per individual or $12,240 for a family of five, the Internal Revenue Service says.
The Obama administration on Thursday announced an upper limit on the federal tax penalties that some Americans will owe for failing to have health insurance.
The IRS cap is based on the monthly national average premium for a bronze-level health plan.
The Affordable Care Act, or Obamacare as some people call it, requires most people to have health insurance this year or pay a penalty when they file their 2014 tax returns.
The penalty, or "individual shared responsibility payment," comes in two forms: a flat amount or a percentage of adjusted gross income per household -- whichever is greater.
Penalties for this year start at $95 per adult and $47.50 for a child and rise to 1 percent of household income. In 2016, they jump to $695 per adult, and half of that per child, or 2.5 percent of household income.
The cap described by the IRS will only benefit people making more than about a quarter of a million dollars a year, the Associated Press reported. People who earn less than that would still pay fines of as much as 1 percent of their annual income, the AP said.
Only about 4 million people are expected to pay the penalties -- a fraction of the estimated 30 million who will still be uninsured in 2016, the Congressional Budget Office said in June. Experts believe many uninsured Americans will qualify for exemptions from the federal tax penalties.
The Obamacare sign-up period ended this spring, although people can still purchase coverage for this year under special circumstances, such as a move, divorce or birth of a child.
The next open enrollment period begins Nov. 15. Coverage purchased during that time won't take effect until 2015.
Separately, federal health officials on Thursday said some 6.8 million families are due to get a refund from their health insurer this summer. The refunds, averaging $80 per family, will be made in the form of a check or premium reduction, according to the U.S. Department of Health & Human Services.
The refunds are the result of a provision in the Affordable Care Act barring insurers from spending more than 20 percent of premium dollars on administration and marketing expenses.
In a press release, U.S. Health and Human Services Secretary Sylvia Burwell said ACA provisions like this one "provide Americans better value for their premium dollars."
In a blog for the National Center for Policy Analysis, a free market think tank, health analyst Greg Scandlen said consumers do not benefit from the rebate provision because insurers can overcharge people and earn interest on that money over the course of a year.
"So consumers in effect are simply giving the insurers an interest-free loan for a year," he wrote.
HealthCare.gov has more about Affordable Care Act coverage.
Posted: July 2014