The Internal Revenue Service this week set out rules for the implementation of the individual mandate, one of the most controversial portions of the Obama health law, which requires Americans to buy health insurance beginning in 2015.
The 73 pages from the IRS are filled with enough bureaucratic language to make your head hurt, whether you supported the President's reform efforts or not.
You can read the entire document at the IRS website .
Remember the controversy over whether the failure to buy insurance would subject you to a tax or a penalty? (I've always just labeled it a "tax penalty.)
Well, now the IRS calls it a "shared responsibility" payment for those who chose not to buy health insurance, also labeling it an "additional payment."
The IRS says the health reform law "provides nonexempt individuals with a choice: maintain minimum essential coverage for themselves and any nonexempt family members or include an additional payment with their Federal income tax return."
Here are some examples from the IRS document:
Example 2. Married employee with dependents. Taxpayers B and C are married and file a joint return for 2016. B and C have two children, D and E. In November 2015, B is eligible to enroll in self-only coverage under a plan offered by B's employer for calendar year 2016 at a cost of $5,000 to B. C, D, and E are eligible to enroll in family coverage under the same plan for 2016 at a cost of $20,000 to B. B, C, D, and E's household income is $90,000. Under paragraph (e)(3)(ii)(A) of this section, B's required contribution is B's share of the cost for self-only coverage, $5,000. Under paragraph (e)(1) of this section, B has affordable coverage for 2016 because B's required contribution ($5,000) does not exceed 8 percent of B's household income ($7,200). Under paragraph (e)(3)(ii)(B) of this section, the required contribution for C, D, and E is B's share of the cost for family coverage, $20,000. Under paragraph (e)(1) of this section, C, D, and E lack affordable coverage for 2016 because their required contribution ($20,000) exceeds 8 percent of their household income ($7,200).
Got that?
But wait, there's more.
(i) In 2016 Taxpayers M and N are married and file a joint return. M and N have two children, P and Q. M, N, P, and Q are ineligible to enroll in minimum essential coverage other than coverage in the individual market for a month in 2016. The annual premium for M, N, P, and Q's applicable plan is $20,000. The adjusted annual premium for M, N, P, and Q's applicable benchmark plan (within the meaning of §1.36B-3(f)) is $25,000. M and N's household income is $80,000, which is 347 percent of the Federal poverty line for a family size of 4 for the taxable year. (ii) Under paragraph (e)(4)(ii)(C) of this section, the credit allowable under section 36B is determined pursuant to section 36B. With household income at 347 percent of the Federal poverty line, the applicable percentage is 9.5. Because each month in 2016 is a coverage month (within the meaning of §1.36B-3(c)), the maximum credit allowable 61 under section 36B is the excess of the premium for the applicable benchmark plan over the product of the household income and the applicable percentage ($17,400). Therefore, under paragraph (e)(4)(ii)(A) of this section, the required contribution for M, N, P, and Q is $2,600. Under paragraph (f)(2) of this section, M, N, P, and Q have affordable coverage for 2016 because their required contribution ($2,600) does not exceed 8 percent of their household income ($6,400).
So, you get the picture. It will be complicated in many cases.
Take a look at the rules and leave a comment below.
