As 2014 nears its close, Americans without insurance are running out of time to avoid the significant ObamaCare penalties that are scheduled to hit in 2016. The deadline to avoid the penalties is February 15, 2015. Uninsured Americans will be faced with a fines of $325 per adult or two percent of family income, whichever is higher. But whether the IRS will be able to effectively enforce the individual mandate remains to be seen.
But according to CPA Practice Advisor, Americans who are expecting to pay a fine in 2015 have entirely too much faith in the IRS and its abilities. According to that site, “The IRS has absolutely no way of verifying whose insurance coverage did not qualify under the law and who pays the penalty.” Citing all the obstacles the IRS faces in enforcing the mandate, the site concludes that the IRS will be unable to effectively enforce the mandate:
With just under 25 million people enrolling in the federal and state health exchanges (including Medicare and Medicaid recipients), plus the estimated 150 million who have employer-paid health care plans, there are still some 62 million people who would have to pay a penalty but likely will not. For those who do the math the IRS apparently did not, that’s a potential loss of nearly $6 billion in revenue….
But wait, it gets worse. Some 3.6 million more people were laid off during the year and lost their health benefits — becoming liable for some or all of the penalty for the months they were not covered. Call that another billion and a half dollars.
And even worse. Those who successfully did enroll in Obamacare and received a premium credit must repay the overage if the IRS finds that the customer’s 2014 income increased over the 2012 income used as a benchmark. That’s the theory, but with the start of tax season mere weeks away there is no mechanism to make that comparison. The final rules say there will be income comparisons, but who will do this?
And worse yet. Those who do not meet the “essential minimum coverage” threshold for individuals can still avoid paying the penalty if they meet one of the dozen or so exemptions, which seem to be granted to any person who breathes air, or has a life crisis like missing a utility bill payment, or having a family member [who] becomes ill or even a family pet with a flea problem. It really doesn’t matter, because there is no place to report either the coverage status or the exemption if you are not already enrolled in a qualified program. Those are supposed to be covered under rules that the IRS has not yet drafted.
The site concludes that agency is clearly too riddled with financial problems and racked by scandal to have set up a “simple database matching program.”
