Feds Estimate Up to 6M Households Could Face ACA Penalties
On Wednesday, the Obama administration released an estimate that as many as six million U.S. households will have to pay a penalty for not having health coverage in 2014 under the Affordable Care Act's individual mandate, the Wall Street Journal reports.
The estimate is based on the share of affected tax filers provided by the Department of Treasury. For tax purposes, a taxpayer refers to a household because taxes are paid by household.
According to Assistant Secretary for Tax Policy Mark Mazur, about 150 million individuals are expected to file tax returns for 2014 (Armour, Wall Street Journal, 1/28). Of those individuals, between 10% and 20% will qualify for an exemption from the penalty (Viebeck, The Hill, 1/28).
Meanwhile, between 2% and 4% of individuals who did not have coverage during 2014 are expected to pay the penalty, which is either $95 or 1% of household income, whichever is higher. Individuals who had health insurance in 2014 will check a box on their federal tax forms noting they were covered (Wall Street Journal, 1/28).
In addition, the administration estimated that between 4.5 million and 7.5 million tax filers qualified for subsidies to help purchase coverage through the exchanges. Some of those individuals might have to pay money back to or receive money from the federal government if their subsidy payments were based on incorrect income estimations (The Hill, 1/28). According to Reuters, IRS will waive penalties that some individuals could have to pay if they owe money to the federal government for receiving subsidies that were too high (Morgan, Reuters, 1/28). In addition, a federal official noted that even if individuals received subsidies that were too large, it is unlikely "that the amount of settling up will exceed the refund for a very giant number of taxpayers" (The Hill, 1/28).
Despite the estimates, officials said they still are unsure what to expect because many of the ACA's coverage expansions did not take effect until last year. One official said, "This is the first time going through the process, and so we're not exactly sure how many are going to claim an exemption" (Dinan, Washington Times, 1/28).
HHS Warning of Potential Penalties
In related news, HHS has begun sending federal tax forms related to health coverage to U.S. residents and is partnering with tax preparers to help individuals understand the forms, CQ HealthBeat reports.
The new 1095-A form will list the subsidies individuals received to help them purchase coverage through the exchanges and serves as documentation that individuals had health coverage in 2014.
HealthCare.gov CEO Kevin Counihan said that if individuals think information on the form they receive is incorrect, they should call the federal call center's hotline to report the discrepancies (Adams, CQ HealthBeat, 1/28).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.