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6 million Americans expected to face Obamacare’s uninsured penalty, er, tax

September 20, 2012

Last night at an event in Miami, Mitt Romney embraced his status as the "grandfather of Obamacare."


Health insurance certificateI bet the Republican presidential nominee wished he had gotten a preview of today's Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) report on the tax costs of the Patient Protection and Affordable Care Act, also known as the health care reform law.


The CBO and JCT now estimate that nearly six
million people will face penalties (or a tax as the Supreme Court ruled) for not getting health insurance as required by the law's individual mandate that kicks in in 2014.

That's two million more than the previous estimate.

The tax initially will be $695 or 2.5
percent of household income, whichever is greater, and will increase over time. By 2016 when the provison is fully phased in, the average penalty is expected to be $1,200.

One bit of good news for all these folks who could be facing the uninsured penalty is that the Internal Revenue Service, which will administer the fee, won't be that gung-ho about the provision.

An IRS representative told Congress earlier this month that the third-party reporting of insurance coverage will be handled just like current W2 and 1099 transactions. 

And especially notable for the six million or so individual who might face lack of coverage charges, the IRS doesn't have any authority to place tax levies, liens or criminal charges against those who don't pay the tax.

The individual mandate is projected to bring in between
$7 billion and $8 billion in annual federal revenue. But even though it will substantially bolster the U.S. Treasury, the mandate remains the most controversial component of the health care reform law.
 

Maybe the CBO/JCT's larger estimate of potential payers of the health care tax is part of the reason why Romney today said that his acceptance last night of what he then called a health care compliment was in fact a sarcastic joke.

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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