Six million Americans likely to pay healthcare tax in 2016

WASHINGTON Wed Sep 19, 2012 6:38pm EDT

Bottles of Zocor, the Merck & Co. Inc cholesterol fighting drug, are shown in a pharmacy in Westfield, New Jersey, November 28, 2005. REUTERS/Jeff Zelevansky

Bottles of Zocor, the Merck & Co. Inc cholesterol fighting drug, are shown in a pharmacy in Westfield, New Jersey, November 28, 2005.

Credit: Reuters/Jeff Zelevansky

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WASHINGTON (Reuters) - U.S. budget experts raised their forecast on Wednesday of how many Americans will probably have to pay a penalty in 2016 for not buying health insurance to 6 million from 4 million.

The 50 percent increase was likely to draw fire from Republicans on the campaign trail who want to repeal President Barack Obama's signature healthcare law and who reject the penalty as a government intrusion into the lives of individuals.

But the nonpartisan Congressional Budget Office said some of the increase reflects state opposition to an expansion under the healthcare law of the Medicaid program for the poor, which is most unpopular in states with Republican governors or Republican-majority legislatures.

CBO, which issued its last forecast in April 2010, also attributed the larger number of people facing penalties to a bleaker economic picture that will mean higher unemployment and lower wages and salaries.

There are now 49 million people without health insurance in the United States, according to the U.S. Census Bureau.

Under the Affordable Care Act, better known to the public as "Obamacare," more than 30 million people would become eligible to buy subsidized private insurance or receive Medicaid coverage in 2014.

The law requires most Americans to have some form of health insurance - known as the individual mandate. The law stipulates that those who do not acquire health coverage will face a penalty.

The penalty is scheduled to rise in 2016 to $695 or 2.5 percent of household income, whichever is greater. That year is when the law's provisions are expected to operate fully.

The government is expected to collect between $7 billion and $8 billion in revenue from the penalty, which the Supreme Court ruled constitutional as a form of taxation earlier this year.

The CBO projects that 30 million people who are not elderly will still be uninsured in the United States in 2016. But most will not be subject to the penalty because they are illegal immigrants, members of exempted groups including Indian tribes or have very low incomes.

(Reporting by Kim Dixon and David Morgan; Editing by Kevin Drawbaugh, Christopher Wilson and Philip Barbara)

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Comments (1)
ejhickey wrote:
in 2014, the penalty tax for not buying insurance is $95 or 1% of a person’s income . however there is a cap on the penalty . I am not sure what it is.

the penalty tax increases to $695 or2.5% of income in 2016. again this is capped buti don’t know what that is.

the interesting thing about the penalty tax is that although the IRS is supposed to collect it, Congress did not make it a crime, if you don’t pay it. that’s right. you cannot be put in jail if you don’t buy insurance and don’t pay the penalty. the IRS can still try to collect the penalty tax but there limist built into the law as to how far they can go. the IRS cannot use tax liens or leveys against property to collect the tax. all they can do is issue colection letters and if people fail to pay up , they can be sued for the $95 penalty tax.

I guess what people have to calculate is whether it is cheaper to buy insurance or pay the tax and buy insurance after they get sick. remember no one can be refused insurance for a pre existing condition, even if it is cancer or a broken leg.

Sep 20, 2012 8:19am EDT  --  Report as abuse
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