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The obamacare individual mandate penalty

November 12, 2013

As it stands now, people who don’t obtain health coverage in a given year (and are not exempt) are subject to a fine of $95 for an individual or 1% of family income, whichever is greater. In 2015, it goes up to $325 per adult, or 2% of family income, whichever is greater.

How exactly will the penalty be collected? According to HealthCare.gov, (the government’s marketplace website), the IRS will hold back the amount of the fee from any future tax refunds. See Section 25 at http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision

So, all they can do is wait until you’ve overpaid your taxes and not pay you back.

There are no criminal penalties for not signing up.

The government is counting on the younger, healthier people who don’t place much of a demand on the healthcare system to contribute to the system. But why should they? Many will choose to pay cash for services as they need it. I anticipate that many doctors would actually enjoy payment ON THE SPOT instead of waiting for a tardy payment from an overburdened system. They might even offer a cash discount.

This will have the unintended consequence of huge numbers of younger, healthier people adjusting their withholding so that they slightly underpay their taxes by the end of the year. They will owe a small amount of tax on April 15th.

For a long time the government has enjoyed interest-free loans from people who overpay their taxes. That’s over.

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short link – http://wp.me/p3eR6w-gC

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