Mark Caserta : Ignoring insurance mandate could be costly

26 Jan

Jan. 23, 2014 @ 12:00 AM

Over the past several months, the Obama administration has primarily employed a “soft approach” in convincing individuals to enroll on their health insurance marketplace website.

But their approach will most certainly “broaden” in scope very soon.

March 31 is the open-enrollment deadline for Americans to purchase healthcare coverage as required by the Obamacare individual mandate.

Beginning next year, absent a qualifying exemption, the IRS will begin financially penalizing Americans who refuse to follow the Democrats’ marching orders.

Following this weighty deadline, the IRS will begin “casting its net” to capture what the administration calls a “shared responsibility payment” from individuals who chose “not” to purchase health insurance.

Now, the infinite details would be impossible to capture in a few words, but I’ll highlight the “big rocks.”

While the penalty begins small, it increases in subsequent years and could conceivably reach thousands of dollars per family per year once fully implemented.

The IRS website provides a sequential look at the increases over the next few years:

2014: $95 per person per year or 1 percent of your income.

2015: $325 per person per year or 2 percent of your income.

2016: $695 per person per year or 2.5 percent of your income.

2017: Tax penalty will increase by the rate of inflation going forward, or 2.5 percent of your income.

It’s noteworthy that these percentages are based on your modified adjusted gross income, which adds back certain deductions such as IRA contributions and student loan or higher education deductions. It’s also pro-rated for the number of months you are without coverage beginning after three months.

Currently, the only means the IRS has to collect the penalty is to withhold any money you would get back after filing your income tax returns.

“The amount of the shared responsibility payment will be included on the annual Form 1040 starting with the 2014 return taxpayers file,” Eric Smith, an IRS spokesperson told U.S. News. “It will offset any refund that would otherwise be due or will add to any balance due.”

Now there’s a laundry list of qualifying exemptions, many which benefit low-income Americans. For example, if the lowest-priced coverage available to you would cost more than 8 percent of your household income or if your income is less than 133 percent of the federal poverty level, you’ll be relieved of any penalty.

Additional information can be obtained by visiting

The road ahead is marred with potholes of uncertainty. Higher medical costs, shortage of doctors and longer wait times are all possibilities. If insurance providers collapse under the changes, the government will most likely step in and “rescue” Americans with a single-payer, government-run, healthcare system.

This administration’s belief that Americans have “shared” responsibility in paying for other people’s health insurance aligns perfectly with Barack Obama’s “spread the wealth” ideology.

Each of us must take personal responsibility and seek our best possible options while they’re still available.

But ignoring Obamacare’s individual mandate won’t be a choice.

Doing so could be costly.

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