Wednesday, November 20, 2019

IRS warns millions about health insurance penalty

By on January 14, 2017

By Ricardo Alonso-Zaldivar

WASHINGTON, D.C. — The IRS is sending personalized letters to millions of taxpayers who might be uninsured, reminding them that they could be on the hook for hundreds of dollars in fines under the federal health care law if they don’t sign up soon through HealthCare.gov. It’s an unusual role for a revenue-collection agency.

Fines are one of the most unpopular parts of the 2010 health overhaul, and there’s a high likelihood they’ll get repealed by Republicans, even if other parts of “Obamacare” survive. The administration is counting on IRS reminders to help sign up as many people as possible before open enrollment ends Jan. 31. That’s soon after officials hand off President Barack Obama’s signature program to a Trump administration committed to “repeal and replace.”

In this Oct. 24, 2016, file photo, the HealthCare.gov 2017 web site home page as seen in Washington. President-elect Donald Trump says he wants to preserve health insurance coverage even as he pursues repeal of the Obama-era overhaul that provided it to millions of uninsured people. How his administration handles a pending lawsuit over billions of dollars in insurance subsidies will reveal whether Trump wants an orderly transition to a Republican-designed system or if he’d push “Obamacare” over a cliff. Stripping away the subsidies at issue in the case would put the program into a free-fall. (Pablo Martinez Monsivais, File/AP)

In this Oct. 24, 2016, file photo, the HealthCare.gov 2017 web site home page as seen in Washington. President-elect Donald Trump says he wants to preserve health insurance coverage even as he pursues repeal of the Obama-era overhaul that provided it to millions of uninsured people. (Pablo Martinez Monsivais, File/AP)

Letters bearing the IRS logo will be sent to an estimated 7.5 million people who either claimed an exemption from the law’s requirement that most Americans carry health insurance, or who paid a penalty for being uninsured during the 2015 tax year. The coverage requirement was included in the law as a way to get healthy people into the insurance pool, helping to keep premiums in check.

The penalty for this year could be $2,085 or more, depending on family size and income, says one draft version of the IRS letter. Another draft takes a somewhat different approach, leaving a blank space for the IRS to provide an individualized estimate of what the particular uninsured taxpayer might owe.

The drafts were obtained by The Associated Press. Although the administration has made no secret of the IRS role in open enrollment this year, officials have not responded to requests for copies of the actual letters.

See also: Health Secretary to lobby Washington to prevent collapse of Obamacare

Republicans say the whole thing is a waste of money. The campaign will cost about $4 million, say congressional aides.

“People receiving these letters have already made up their minds about Obamacare when they applied for an exemption or paid a penalty,” said House Ways and Means Chairman Kevin Brady, R-Texas. “They don’t want stock letters. They want better health care choices and lower costs.”

Supporters of the health care law say research has shown that many people who remain uninsured are still unaware that they can go to HealthCare.gov and qualify for government subsidies to help pay their premiums. Those subsidies were designed as tax credits, bringing the IRS into the picture. The IRS letters make the pitch:

“Most people who enroll in a plan through HealthCare.gov can find plans for $75 a month or less after financial help,” the letters say. “At HealthCare.gov, you can compare plans to find one that meets your needs and budget.”

While such low-cost plans are available, many people actually pay more, and the $75 figure doesn’t take into account deductibles and copayments. The average monthly premium last year for HealthCare.gov customers was $106, after financial help, according to the government. The administration has not released a comparable premium estimate for this year. Insurers raised their sticker prices significantly, but the law’s subsidies should cushion the impact for most HealthCare.gov customers.

About 800,000 letters went out after Thanksgiving, and an additional 6.7 million are going out now, according to congressional aides.

See also: Congress to Complete First Step to Repealing Health Law

Last year about 6.5 million people paid fines for being uninsured, averaging $470, according to recent IRS data. The amount is generally deducted from a taxpayer’s anticipated refund. The fines started small in 2014, but are now fully phased in, starting at about $700.

The administration has a goal of signing up 13.8 million people for coverage this year and is looking for a strong finish to open enrollment season. Although the Affordable Care Act has reduced the nation’s uninsured rate to a historic low, it remains politically divisive.

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