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Posts Tagged ‘penalty’
April 10th, 2015 at 2:57 pm
Beware ObamaCare as Tax Day Approaches

Nearly every American that received an ObamaCare subsidy to help pay for health insurance last year got the wrong amount.

“Only 4 percent of the people who signed up for ObamaCare got the correct subsidy, so a whopping 96 percent will see their tax bill adjusted, some up and others down,” writes Betsy McCaughey. “Who would design a system that’s right only 4 percent of the time?”

The main reason for the discrepancy is that a person must estimate – i.e. guess – their entire taxable income for the next year in order to find out how much of a subsidy they qualify for under ObamaCare during enrollment season. A raise or switch to a higher paying job could be zeroed out because the government gets to “clawback” the difference. Losing a job means a fatter refund.

You can see which direction ObamaCare’s incentives point to, which provides a partial answer to McCaughey’s rhetorical question – people who penalize moving up the income ladder.

April 2nd, 2015 at 5:58 pm
ObamaCare’s Subsidy “Clawback” Feature Explained

Daniel Payne at The Federalist has a must-read article explaining the perverse and punitive feature of ObamaCare that allows the federal government to “clawback” subsidy amounts from eligible recipients.

“If you’re flat broke at the beginning of the year and accept tax credits from ObamaCare for several months, then find a high-paying job with health insurance halfway through the year and make enough money to put yourself over the subsidy threshold, you’ll owe back every penny of those subsidies you received come tax season, even though you had no money when you received them,” writes Payne.

ObamaCare’s critics have warned that the law would discourage people from getting better paying jobs for fear of losing their health insurance subsidy. In practice, it looks like the penalty on work could be even worse.

March 19th, 2015 at 5:18 pm
Large Numbers of Americans Not Prepared for ObamaCare Penalty

If you didn’t have health insurance last year, could afford it (according to ObamaCare), and don’t have a waiver from the individual or employer mandate, you will be getting a notice from the IRS this year that you owe Uncle Sam some money.

Apparently, this will be a surprise to a lot of people.

“A Kaiser Family Foundation poll released Thursday found that while slightly more than half of respondents were aware the penalty kicks in this year, one in five think it goes into effect next year, roughly one in six say they don’t know when it goes into effect, and one in 10 believe it was rolled out last year,” reports the Washington Examiner.

Look for ObamaCare’s unpopularity to increase even more after Tax Day.

February 17th, 2015 at 12:53 pm
Congressional Democrats Want to Delay ObamaCare Penalties

It looks like having the courage of one’s convictions about the imperative of ObamaCare doesn’t include making good on the Democrats’ promise to “pay-as-you-go.”

Once upon a time when Rep. Nancy Pelosi (D-CA) was Speaker of the House, Democrats in Congress made a lot of noise about PAYGO, the fiscal policy that essentially requires new spending to be paid for with spending cuts, tax increases, or some combination of the two.

But now that ObamaCare’s IRS-imposed penalties are coming due, those same Democrats are singing a different tune.

“Three senior House members told the Associated Press that they plan to strongly urge the administration to grant a special sign-up opportunity for uninsured taxpayers who will be facing fines under the law for the first time this year,” the AP reports.

Interestingly, the three House members – Michigan’s Sander Levin, Washington’s Jim McDermott and Texas’ Lloyd Dogget – “[a]ll worked to help steer Obama’s law through rancorous congressional debates from 2009-2010.”

And now that the price of non-compliance with ObamaCare’s tax-raising mandates is becoming obvious, all three want to avoid a predictable constituent backlash.

Sorry fellas, if spending at least $684 million annually to educate the public about ObamaCare isn’t enough to adequately inoculate against angry voters, perhaps there’s a fatal flaw in the law.

At any rate, it’s time the American public got the version of health reform you voted for.

January 29th, 2015 at 6:20 pm
Health Insurance Penalty Obama Decried in 2008 Coming Due in 2015

Add another bullet point to ObamaCare’s litany of broken promises.

The U.S. Treasury announced this week that on Tax Day this year, “Some 3 million to 6 million Americans will have to pay an ObamaCare tax penalty for not having health insurance last year,” reports CNN Money.

Since the penalty is the greater of $95 or 1 percent of income, the bill could bigger than expected.

To calculate possible amounts, go here.

Though it’s been awhile, some may recall that in 2008 a certain presidential candidate attacked Hillary Clinton for being open to garnishing workers’ wages if they failed to buy health insurance under her reform proposal. True to form, Barack Obama promised no such penalty if he was elected president.

Now we know the truth.

January 7th, 2015 at 11:02 am
IRS Tax Refunds Could be Much Smaller Under ObamaCare This Year

Anyone still looking for a fundamental change to the federal tax code need look no further than ObamaCare.

H&R Block, one of the nation’s largest tax preparation companies, is promoting its free “ACA Tax Impact Analysis” on January 8, 2015, in order help taxpayers understand the true cost of ObamaCare.

Reporting by The Hill quotes an H&R Block executive as saying that the controversial health law is “the biggest tax code change” in two decades. Its passage “has made health care a tax issue and is going to make filing taxes more complicated this year.”

Perhaps the biggest surprise coming to millions of taxpayers is the penalty amount to be assessed for not complying with the law’s individual mandate. Most people know that the IRS can levy a $95 fine for being uninsured this year (which rises every subsequent year). But many do not realize that’s only one option. ObamaCare authorizes fines up to 1% of annual income (which also rises every year), if that amount is greater than $95.

Simply put, a lot of people who passed on ObamaCare’s costly version of “affordable” insurance thinking they would only have to write a $95 check may be missing a much bigger chunk of their IRS refund this year.

November 12th, 2014 at 6:20 pm
ObamaCare’s 2015 Tax Bite

Too bad the incoming Republican majority in Congress probably can’t repeal ObamaCare’s individual mandate before next April, because it looks like millions of middle-income Americans will see their tax refund cut by one-third.

“The financial penalty for skipping out on health insurance coverage [i.e. not complying with the individual mandate] will more than triple to $325 per person in 2015, or 2 percent of income, depending on whichever is higher,” reports CBS News. “Children will be fined at half the adult rate, or $162.50 for those under 18 years old.”

“Based on the flat-rate method, the maximum dollar amount an uninsured family could be fined is $975,” says the news outlet.

To put this into perspective, the average annual American tax refund is about $3,000, meaning that a $975 IRS penalty would reduce the value by one-third.

This is likely to hit middle-income Americans particularly hard since many may be earning too much in wages or salary to qualify for an ObamaCare subsidy. The Catch-22 facing these families is cutting back on other spending to pay high monthly premiums, or foregoing insurance and waiting to see how much the IRS will confiscate. Either way, the predicament facing millions of middle-income Americans is likely to make them even more hostile toward a law billed as the “Affordable Care Act.”

August 7th, 2014 at 3:24 pm
The Coming ObamaCare Bailout

Because of ObamaCare’s mismatched incentive structure, some savvy commentators are warning of an impending, multi-billion dollar bailout of the insurance companies selling health care policies under the law.

“Pre-ObamaCare,” writes Dan McLaughlin, “insurers had to price their policies mainly by reference to market forces (albeit in an already heavily-regulated market)… Guess wrong and you lost money. But under ObamaCare, consumers no longer have the choice whether or not to buy policies, and insurance companies no longer face any risk of losing money, because they’ve been promised a bailout. Money will still be lost, but it will be taxpayer money, and you never run out of that, do you?”

McLaughlin is talking about ObamaCare’s “3 R’s” – reinsurance, risk corridors and the risk adjustment program. I’ve written about this multi-year, $20 billion bailout before. In different ways, each is designed to subsidize insurers for lost revenue traceable to the health law’s dysfunctional mandates. The threefold scheme was buried in the legislation to buy the support of large insurance companies who would have refused to participate without it.

Now the bill is coming due.

Based on interviews and documents containing discussions between Obama administration officials and insurance industry executives, a House Government Oversight report reveals that insurers are expecting the following payments:

1)      $640 million from the Risk Corridor program for the 2014 plan year

2)      $346 million from the Risk Adjustment program

The reinsurance program redistributes money among private insurance companies, as determined by the federal government.

The numbers quoted above are two to three times higher than originally anticipated because of the high level of adverse selection – i.e. too many older and sicker enrollees, not enough younger and healthier ones. The latter group is avoiding enrollment, preferring to pay ObamaCare’s relatively low penalty. But even that is a mirage. Reports are surfacing that as many as 25 million uninsured Americans are getting ObamaCare penalty waivers for next year; further increasing the federal budget deficit.

Bailouts can be nice, if they apply to you. But as a governing strategy, they eventually bankrupt the entire system.

April 11th, 2014 at 2:44 pm
IRS’s ‘Big Brother’ ObamaCare Enforcement Coming into View

As Tax Day approaches, consider the bright side – at least there’s no ObamaCare form you have to fill out.

That changes next year.

“According to the agency, the IRS plans to include a specific line on the 1040 forms for taxpayers to ‘self-attest’ whether they purchased insurance,” reports Fox News. “It will most likely include a worksheet for taxpayers to calculate how much they owe – essentially either a flat penalty or a percentage of their income.”

Next year the penalty is either $95 or 1 percent of your income, whichever is greater.

The IRS plans to confirm whether taxpayers are telling the truth about purchasing insurance by getting enrollment records from insurance companies.

So along with increased paperwork, we can all look forward to a greater amount of government surveillance into our insurance (and eventually our health) records.

All in the name of helping us. Thank you, Big Brother.

March 31st, 2014 at 6:20 pm
IRS Compliance Nightmare Looms as ObamaCare Site Crashes Ahead of Deadline

This morning Healthcare.gov – the federal ObamaCare website serving citizens in 34 states – went down for four hours, stymieing customers from accessing or completing their applications for insurance.

NBC News reports that people unable to log onto the website were put in a “queue,” meaning they would be notified by email when they could resume the enrollment process.

But with the deadline to begin an application (supposedly) ending at midnight, what will happen to people unable to return to their computer screens after the lengthy delay? Last week’s extension to mid-April only covers people who start the process for enrolling by the end of March. If other commitments – say family or work responsibilities – don’t allow an applicant to return, what then? How will federal regulators distinguish between people who never tried to use Healthcare.gov and those that did, but for various reasons beyond their control couldn’t finish?

If history is any guide, don’t expect the feds to make a distinction. More likely, the response sometime soon will be a blanket extension for enrollment that allows anyone – without precondition – to complete the process.

Then it will be the IRS whose head will spin. When it comes to enrolling on an ObamaCare exchange, the carrots are the subsidies and the sticks are the fines. Any adult that goes without health insurance for three consecutive months is subject to a fine of $95 or 1 percent of her annual income, whichever is higher. And since that fee gets levied at next year’s tax filing, it will be the IRS’ job to sort out who is subject to the penalty.

That is, as soon as the political operatives in the Obama administration decide when enrollment really, really – no really we’re serious this time! – ends.

December 24th, 2013 at 2:02 pm
Extended Obamacare Deadline Explained

If you’re fretting over whether to interrupt Christmas Eve activities to sign up for an Obamacare insurance plan, fear not.

“Today’s the deadline to sign up for health insurance on HealthCare.gov if you want that insurance to start by January 1st. But that’s it,” explains Ezra Klein. “If you don’t sign up today and instead sign up on Friday, or next Tuesday, your insurance will kick in a bit after January 1st. There’s no difference in premiums. There’s no difference in plans. There are no penalties.”

I bolded the last sentence to draw attention to an important piece of information often missed in the reporting about the January 1st start date. As Klein says, “The [individual] mandate only kicks in when people have a coverage gap of longer than three consecutive months during the year. That means that buying insurance any time before the end of March [i.e. the end of the open enrollment period on the exchanges] is good enough to avoid the penalty.”

The upshot: Maybe by March the federal government will have fixed all the problems with Obamacare. Maybe. For now, enjoy the Christmas season.

August 26th, 2011 at 6:47 pm
No, America, You Can’t Keep Your Health Plan

Remember when in June 2009 President Barack Obama promised that under his health care reform bill, “If you like your doctor, you will be able to keep your doctor, period.  If you like your health care plan, you’ll be able to keep your health care plan, period.  No one will take it away, no matter what”?

Byron York makes this contradictory observation:

On the one hand, the new law orders the establishment of health care “exchanges” through which anyone can purchase government-subsidized coverage. On the other hand, the law levies fines on employers who fail to offer coverage to their employees — but sets the fine far below the cost of coverage. In 2010, the average employer paid $4,150 to cover a single employee and $9,773 for family coverage. (Both figures are about double what they were in 2000.) The new law sets fines for employers who don’t cover their workers at $2,000.

So when it takes effect in 2014, the law will give employers a choice: Continue to offer increasingly expensive health coverage, or pay a relatively small fine, save a lot of money, and let employees buy their own subsidized coverage on the exchange. The incentive seems pretty clear.

So too does the bold-faced lie Obama told (yet again) in the health care reform debate.  Whichever GOP candidate gets nominated for president should make this issue one of the main talking points of the general election.