IRS’ Unpleasant Role in New Healthcare Plan

Last updated on September 19, 2015

President Barack Obama’s controversial healthcare plan, which requires all Americans to have healthcare insurance, was upheld by The Supreme Court. This victory is now leading to many questions concerning the penalty and how the IRS will enforce the new plan.

Some sections are of the opinion that because the penalty for non-compliance is so little ($95 or 1 percent of taxable household income) many would prefer to pay the penalty than to buy health insurance. But this is only temporary because by 2016, the penalty for non-compliance will gradually increase to $695 per person. For households, it will be either $2,085 or 2.5 percent of the household’s income.

The plan faced stiff resistance from the states. Twenty-six states contended that individual taxpayers cannot be forced to buy insurance. They went to court to get the law repealed. Republicans, after the court’s decision, called to repeal the law in totality. The public is also unhappy with the plan as it stands.

The IRS is also finding it hard to fit into its new unpleasant role of enforcing it. Steven Miller, IRS deputy Commissioner, said, “We will not use levies, liens or criminal prosecutions if taxpayers have unpaid amounts related to the individual-coverage provision. There will not be revenue agents involved in this. These will not be audits.”

Americans who do not buy health insurance will be penalized and it will be IRS’ job to penalize them. But the IRS does not want its agents to get involved in the enforcement.

The Congressional Budget Office has projected that 3.9 million uninsured Americans will be subjected to the penalty payments in 2016. It remains to be seen how the plan will be implemented and enforced.