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1 William McBride, Taxing the Uninsured: The Latest Estimates 1 (2012)

handle is hein.taxfoundation/ffdcbxz0001 and id is 1 raw text is: TAX I- FOUNDATION iscalI c July 16,2012 No. 321 Taxing the Uninsured: The Latest Estimates By William McBride, PhD Introduction On June 28, 2012, the U.S. Supreme Court upheld the Patient Protection and Affordable Care Act (ACA), also known as Obamacare, as a legitimate exercise of Congress' power to tax. Our brief to the Court asserted that the individual mandate is a penalty and not a tax,1 so the Court's conclusion that it is a tax raises certain questions. How will it work? How will it affect families' tax bills? How might it change taxpayers' behavior? The Rules The ACA tax for not purchasing health insurance is a little complicated. Effective January 1, 2014, most Americans without health insurance will be required to make a payment to the U.S. government. Once fully in effect, it is the greater of: A. A flat amount of $695 per adult taxpayer plus $347.50 per dependent under 18. This is the fully phased in amount in 2016, which is adjusted for inflation thereafter. In 2014 it will be $95 per adult plus $47.50 per dependent. In 2015 it will be $325 per adult plus $162.50 per dependent. The flat amount per family cannot exceed three times that for a single individual. B. 2.5 percent of income over the filing threshold2 for federal income taxes. The threshold for 2011 was $9,500 for most single filers, $19,000 for most married filers, and $12,200 for heads of household. It is indexed to inflation. The total tax cannot exceed the national average premium for bronze level qualified health plans offered through exchanges, where bronze plans are those that cover 60 percent of expenses for a standard population. The Congressional Budget Office (CBO) estimates that in 2016 this average premium would be about $4,750 for single policies and $12,250 for family policies. 3 1 Richard Morrison, Supreme Court's Health Care Tax Verdict Flawed, h~ty~:/itaxfoundationorgiartidesuprene-courts-health-care- tax-verdict-flawed. 2 Internal Revenue Service, Publication 501, h)t~tp:I/Iwwwvirs gov/publications/p5O 1 /arO2.htinl. I Letter from Douglas W. Elmendorf, Director, Congressional Budget Office, to Senator Olympia Snowe (Jan. 11, 2010), http://www.cbo.gov/sites/default/files/cbofiles/ftLpdocs/I 08xx/docl 0884/01- 11-premiums for bronze planpdf.

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