Close to two million fewer people than expected will be forced to pay Obamacare’s individual mandate tax in 2016 due to the Obama administration’s generous new exemptions, according to a federal report.
The Congressional Budget Office and Joint Committee on Taxation released a report late Thursday projecting that about four million people will be expected to pay the fine for failing to purchase health insurance, down from the six million people that CBO-JCT estimated in September 2012. That’s just 13 percent of the 30 million non-elderly uninsured Americans that CBO and JCT predict will be uninsured in 2016.
The tax is now projected to collect $3 billion less than previously expected.
The individual mandate tax will grow each year until 2016, when it will be indexed to inflation. In 2014, any of the uninsured who failed to win an exemption from the Obama administration will be charged either $95 or one percent of their taxable income — whichever is greater. That tax will rise to $695 or 2.5 percent of taxable income.
Over the next ten years, CBO and JCT estimate that the federal government will make $46 billion off the Obamacare payments — an estimated $4 billion in 2016 and another $5 billion each year through 2024.
The report found that two-thirds of those paying the individual mandate will be households with income below 400 percent of the federal poverty line, or slightly more than 2.6 million people. The remaining third paying the penalty, with income above 400 percent of the poverty line, will pay for about three-fifths of the total penalty payments.
“The decrease in the number of people who are projected to pay the penalty largely stems from an increase in CBO and JCT’s projection of the number of people who will be exempt from the penalty. That increase is attributable in part to regulations issued since September 2012 by the Departments of Health and Human Services and the Treasury and in part to technical updates and changes in the economic outlook,” CBO-JCT concluded.
Those designated as exempt by the Affordable Care Act itself include unauthorized immigrations; low-income households not required to file tax returns; those who would be eligible for Obamacare’s Medicaid expansion but live in states that opted not to expand; those whose available premiums from employers or available on Obamacare exchanges are designated too expensive; members of Native American tribes and those in prison.
These legally-mandated exemptions get 23 million people out of the individual mandate tax; but another three million will be given an out by the Obama administration’s new exemptions. In March, the Obama administration revealed that it had added a new exemption from Obamacare on top of the 13 existing ones — a “hardship exemption.”
The new rule would allow those who “experienced another hardship in obtaining health insurance” to skip out on paying the individual mandate tax. However, the Obama administration did not define what would qualify as a “hardship,” leading many to say the new exemption could apply to almost anyone.
The exemption was approved by the Obama administration in December in the midst of HealthCare.gov’s meltdown and was intended to give relief to those whose coverage was affected by the health-care law itself — such as those whose health-care plans were canceled because they were non-compliant with Obamacare, or who were thwarted by website failures at HealthCare.gov or a state-run exchange.
By late April, 77,000 families and individuals requested an exemption to the individual mandate, The Washington Post reported. The Obama administration had not rejected any.