Nearly 6 million mainly middle-class Americans -- 2 million more than first estimated - will be required to pay an average tax penalty of $1,200 in 2016 because they failed to buy health insurance as required by the health care reform law, according to an updated report from the nonpartisan Congressional Budget Office (CBO).
The latest numbers nearly double the CBO's original estimate of 4 million penalty payers issued in 2010, shortly after passage of the Affordable Care Act, part of which requires all Americans to be covered by health insurance by 2016 or pay a penalty on their income tax.
The CBO attributes the drastic increase mainly to the effects of legislation passed since 2010 and the fact that the double whammy of higher unemployment and lower household income has left more Americans financially unable to buy health insurance.
In addition, notes the CBO, the recent Supreme Court decision upholding the health care reform law will also increase the number of people expected to pay the penalty.
"As a result of that decision," states the CBO, "some states will not expand their Medicaid programs at all or will not expand coverage to the full extent authorized by the Affordable Care Act. Such state decisions are projected to increase the number of uninsured, a small percentage of whom will be subject to the penalty tax."
The CBO estimates that almost 80% of the 6 million people required to pay the penalty in 2016 will have incomes of $55,850 or less for individuals and $115,250 or less for families of four.
While about 30 million nonelderly people will remain uninsured in 2016, the majority will not be subject to the penalty tax, according to the CBO. Unauthorized immigrants, members of Indian tribes and persons with incomes low enough that they are not required to file income tax returns are all exempt from the requirement to buy health insurance. In addition, persons whose insurance premiums would exceed a legally specified percentage of their income will not be subject to the penalty. Others will be granted exemptions because of hardships or their religious beliefs.
The CBO estimates the government will take in almost $7 billion in payments of the health insurance tax penalty in 2016, and about $8 billion per year over the 2017 - 2022 period.
Under the Affordable Care Act, money raised from the tax penalty must be used mainly to fund government subsidies to help middle- and low-income persons pay for health insurance.
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Comments
Why would anyone want to buy health insurance anymore since you cannot be denied because of an existing condition. Pay the penalty (that’s your health insurance cost) and when something catastrophic or can’t be paid, then you buy life insurance — if you can’t the Medicaid umbrella will take care of you.
If you break your leg, then buy the insurance (you can’t be denied because of an existing condition — your broken leg)
Many people are going to save 10s of thousands a year and 100s of thousands over their lifetime on health insurance costs. Thank you BO
The Affordable Care Act certainly facilitates greater access to health insurance for all Americans and that’s a good thing. But forcing people to buy health insurance via the tax code is just wrong. Neither is paying taxes for the uninsured. Let people decide whether they want to buy insurance or not. If they don’t, then they should be ready for the costs and consequences. Time for responsibility.
@paul, If everyone that can save money decides to not have health coverage and pay the penalty as you suggest…Then only take health insurance when needed, insurance rates will skyrocket well beyond the already projected increases. Health insurance will then cost the same as what the average cost of care would be. People will end up paying the same as what they would pay the doctor/hospital. …otherwise every health insurance company will go bankrupt.