Health care issues: Penalties for no insurance

The Associated Press

THE ISSUE: If individuals don't get health insurance, will they be penalized and how will it happen?

THE POLITICS: President Barack Obama did not propose penalties for people who don't get health insurance as a candidate, but he now supports an individual mandate as long as waivers are available for those for whom it would be a hardship. Republicans say the penalties, which are referred to as taxes in congressional documents, would violate Obama's campaign pledge not to increase taxes on families making less than $250,000 a year. Supporters say a penalty is needed to prevent people from gaming the system. All the overhaul plans under consideration would prohibit insurance companies from denying coverage to people because of pre-existing medical conditions. Many Democrats say penalties areneeded to prevent people from going without insurance until they get sick.

WHAT IT MEANS: All the overhaul plans under consideration require individuals to get qualified health insurance, and they all have penalties for not doing so, with exemptions for financial hardships. The Senate Finance Committee bill would start phasing in fines for individuals who don't get insurance in 2014, with the fines reaching $750 in 2017. The House plan would fine individuals 2.5 percent of their modified adjusted gross income, up to the cost of the average national premium for basic coverage. The IRS would collect the fines through tax returns. Failure to pay federal taxes can result in criminal charges, though it rarely does unless fraud is involved. The Senate Finance Committee bill specifically prohibits criminal penalties.

— Stephen Ohlemacher

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October 27, 2009 12:05 PM EDT

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