4M Residents To Pay Individual Mandate Penalties in 2016, CBO Says

About four million people are expected to pay penalties under the Affordable Care Act's individual mandate in 2016, down from an initial estimate of six million, according to a report released Thursday by the Congressional Budget Office and the Joint Committee on Taxation, the Washington Post's "Wonkblog" reports.

Under the ACA's individual mandate, most U.S. residents are required to purchase individual coverage beginning this year or risk penalties of $95 for an adult or 1% of an individual's taxable income, whichever is higher. The penalties will increase to $325 or 2% in 2015 and $695 or 2.5% in 2016.

The federal government is scheduled to start enforcing the mandate in 2015, after people file their 2014 tax returns (Millman, "Wonkblog," Washington Post, 6/5).

Report Details

The report found that about 30 million U.S. residents will be uninsured between fiscal years 2015 and 2024 (Dickinson, Modern Healthcare, 6/5). However, the report found that about 23 million of those individuals likely would qualify for one of the mandate's seven main exemptions (Howell, Washington Times, 6/5). Of the remaining seven million people, about three million are expected to qualify for the provision's hardship exemptions (Radnofsky/McKinnon, Wall Street Journal, 6/5).

According to the report, the estimated four million U.S. residents will be expected to pay penalties that will total roughly $4 billion in 2016, while the penalty will bring in an average of $5 billion between 2017 and 2024 (Modern Healthcare, 6/5). The majority of those individuals will be low- or middle-income U.S. residents. However, about 31% will come from households that have incomes at 400% or more of the federal poverty level. Those families will account for 61% of the total collected in 2016 (Wall Street Journal, 6/5).

In 2012, CBO estimated that about six million U.S. residents would pay the penalty, bringing in about $7 billion to the federal government. According to Modern Healthcare, the decrease can be attributed to regulations that HHS released after CBO's 2012 estimates (Modern Healthcare, 6/5).