Get ready to fill out Obamacare’s individual mandate tax form

Ryan Ellis President, Center for a Free Economy
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If there’s one part of the president’s healthcare law (Obamacare) that Americans know they don’t like, it’s the law’s “individual mandate.” When the Kaiser Family Foundation polled Americans about their views on Obamacare earlier this year, it found that the mandate had the support of just 30 percent of respondents. If people don’t like the individual mandate much now, they will like it a whole lot less when it becomes part of their annual tax filings with the IRS.

Starting in 2014, most Americans will have to purchase “qualifying” health insurance. This insurance plan can be an employer-provided plan, a plan from the individual market, or a government plan like Medicare, Medicaid, and veterans’ care. What all these plans will have in common is that they must be approved as qualified by the Department of Health and Human Services (HHS), which will get to mandate what each plan must cover and how.

Failure to obtain qualifying coverage could result in payment of a tax penalty to the IRS. Depending on family size, the tax penalty will range from $695 to $2,085 (plus inflation). For many families, a higher penalty of 2.5 percent of adjusted gross income (AGI) will apply.

Make no mistake about it — this is a tax. The Obamacare statute places this payment right in the Internal Revenue Code. It’s money paid from your family to the government — and not just the government, but the IRS. It’s reported and paid on your 1040. If you don’t pay it, the IRS will assess further penalties and interest until you do, and confiscate future tax refunds for repayment. Correspondence audits and field visits will be used by the IRS to ensure payment of this tax penalty.

According to the non-partisan Congressional Budget Office (CBO), six million families will have to pay this Obamacare individual mandate surtax. Most of these will make less than $100,000 per year, putting them solidly in the middle class. When combined with the 19 other new or higher taxes in Obamacare, the individual mandate non-compliance surtax makes a mockery of President Obama’s “firm pledge” in 2008 not to raise “any form of tax” on any family making less than $250,000 per year.

While six million families will have to pay this tax, everyone who files a tax return will have to file the form disclosing whether or not they obtained “qualifying coverage.” According to IRS data, roughly 140 million tax returns are filed every year. Nearly all of these will have to include the Obamacare individual mandate compliance form, adding yet another layer of complexity to American families’ favorite April pastime: tax preparation.

How will this qualifying insurance coverage be documented? Families can look forward to another tax reporting form in the mail every January, this time from their health insurance company. All health insurance companies will issue a new tax form reporting health insurance coverage for you. Just like your W-2 or your mortgage interest statement, one copy will go to you, and one to the IRS. This form will report your personal health information, including your health ID number, the ID number of your health insurance company, and the number of months that you were covered by this plan. If you try to report anything different than what is on the form, the IRS will have a copy and know it, and an audit (or at least strongly worded correspondence) will follow.

Will anyone be exempt from this mandate-and-tax regime? Yes, though you might not like the answer.

Exemptions in the law include but are not limited to: those on welfare or otherwise not making enough money to file a tax return; criminals living behind bars; those not in the country legally; and those whose religion was deemed by HHS to have a sufficient theological objection to health insurance (no word yet on whether HHS will start hiring unionized theologian-bureaucrats). If you’re not in one of these categories, chances are you will be forced to document to the IRS whether you bought government-approved health insurance, and pay an extra tax if you didn’t.

As a service to the public, Americans for Tax Reform has drawn up what this tax return may reasonably look like. All of the invasive personal information disclosure is on there, as well as the exasperating exemptions and instructions on how to calculate your tax fine. It can be found at ObamacareTaxForm.com.

All voters should look it up, share it on Facebook and Twitter, and ask themselves and their neighbors whether this is the world they want to live in after Election Day.

Ryan Ellis is tax policy director for Americans for Tax Reform. Follow him on Twitter @Ryanlellis