July 25—A lack of qualifying health insurance this year could result in fines of up to $2,448 for individuals and $12,240 for families, according to specific parameters set this week by the IRS.

The maximum for individuals and families of five or more members were created under the Affordable Care Act’s (ACA’s) individual mandate that established tax penalties of 1 percent of annual household income if they make more than $19,650. Those with incomes below that amount would result in a $95 annual fine, while no fines would result for noncompliant residents with incomes less than $10,150.

The individual mandate penalties are scheduled to increase to $325 or 2 percent of income in 2015 and $695 or 2.5 percent of income in 2016. The federal government plans to start applying the tax penalty in 2015, based on 2014 tax returns.

The maximum penalties described this week would be triggered by individuals earning more than $244,800 and by families with incomes of $1.2 million.
The IRS used the Bronze level plans to calculate how much individuals should be fined. Insurance plans under the Bronze level meet the minimum insurance requirements for all adults under the ACA.

The individual mandate is expected to result in $46 billion in tax penalties from 2015 to 2024, according to the Congressional Budget Office (CBO).

Employer Mandate Coming

The Obama administration also signaled this week that it intends to continue with the rollout next year of the long-delayed employer mandate.
The IRS posted draft forms that employers with more than 100 employees would need to provide to employees to satisfy the mandate, which has been twice delayed past its statutory start date by the administration. 

The mandate’s delay also is the focus of a lawsuit by the House of Representatives alleging President Barack Obama has exceeded his constitutional powers by failing to implement laws as written.

The forms drew early criticism from some employer groups as insufficient for them to meet the new ACA requirement.

A growing chorus of ACA supporters has called for cancelling or repealing the employer mandate as a non-essential requirement that will produce additional political complications for the law.

Most mid-sized businesses that employ 50 to 99 full-time workers will have another year to provide health insurance coverage to employees, according to a timeline released by the Department of Treasury and the IRS in February. These employers will not face fines for failing to provide coverage to workers until 2016.

Failure to comply with the employer mandate is expected to result in $139 billion in tax penalties from 2015 to 2024, according to the CBO.

Publication Date: Friday, July 25, 2014