Lest We Forget...

Some sobering statistics from the CBO (Congressional Budget Office) approximating who will be responsible* in paying the penalty/taxes for failing to obtain qualifying health insurance in 2016 should Obamacare proceed as planned.

CBO: Six Million People to Pay Individual Mandate Penalty Tax in 2016
Jonathan H. Adler • September 19, 2012

The Congressional Budget Office has just released new estimates of the number of people who will be subject to the individual mandate penalty tax for failing to obtain qualifying health insurance in 2016. According to CBO’s new analysis, the penalty tax will be paid by six million people. The penalty tax will generate an estimated $7 billion for the U.S. treasury and 80 percent of those paying the penalty tax will earn less than 500 percent of the poverty level. (For reference, the poverty line for a family of four is $23,050 in 2012, according to HHS.) The estimated number of people who will have to pay the penalty tax is approximately 50 percent higher than the CBO’s 2010 estimate, but the CBO only attributes a small portion of the increase to potential state decisions to opt out of the Medicaid expansion as allowed by NFIB v. Sebelius. According to the CBO, 30 million Americans will remain uninsured in 2016.

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Added: *Or will they?

“We will not use levies, liens or criminal prosecutions if taxpayers have unpaid amounts related to the individual-coverage provision,” Steven Miller, an IRS deputy commissioner, said Tuesday at a House Ways and Means subcommittee hearing. “There will not be revenue agents involved in this. These will not be audits.”

Miller also said the IRS will match what is reported on a tax return with the information reported by insurers. The agency will then follow up by letter with taxpayers “who appear to have overpaid, underpaid and/or were not eligible for an exemption.”

He made the statement before members of the Republican-controlled House, who, with other party members, have expressed concerns that the IRS will be filling its ranks to go after those who fail to buy the insurance.

Though the IRS will not garnish wages, the agency intends to send out notices informing Americans that they failed to purchase insurance and it could still dock tax returns.

The law states that Americans who fail to buy the insurance must pay the federal government either $95 or 1 percent of their taxable household income annual in the first year.

The relatively low penalty has sparked concern that Americans will opt to pay that cost instead of buying the insurance.

However, the penalty gradually increases to $695 a person by 2016, with the maximum amount being the greater of either $2,085 per household or 2.5 percent of the household’s income, according to the Congressional Research Service.