The IRS finalized its rules regarding the penalty that individuals must pay for failing to obtain health insurance next year, as well as what constitutes the minimum amount of coverage one must obtain, amongst other things.
The individual mandate challenged and upheld by the Supreme Court is still a political flashpoint as evidenced by the GOP’s attempt to repeal it 40 times. Nevertheless, all signs indicate that “Obamacare” will be in place by next year:
“I believe the individual mandate will go into effect,” said Tim Jost, a professor at Washington and Lee University law school, who backs the law. “It is important for people to remember that it is phased in and the first year it has very little bite. Basically the idea is to make people realize that it is there.”
The penalty for individuals who choose NOT to insure themselves will start at $95 per person per year or 1 percent of their income in 2014, whichever is greater. However, the penalty can eventually increase all the way up to $695 per person or 2.5 percent of income by the year 2016.
The individual mandate is distinct from the employer mandate, which imposes a fee on most large employers that do not offer a minimum level of coverage. The Administration delayed that provision, putting off the effective date until 2015.
Backers of the law say that, unlike the employer mandate, the individual mandate is essential to ensure enough individuals are enrolled in the system to allow the online marketplaces to function.
The rules announced on Tuesday offered good news to employees getting health coverage through a union-sponsored plan. They clarify that these employees will not be penalized, said tax lawyers who reviewed the rules on Tuesday.
The IRS rules also said employees getting healthcare coverage from a temporary staffing agency are safe from penalties.