Health Care "Reform"?
Assuming you aren't living under a rock, you know that last month, Washington passed the most significant health care legislation since passage of Medicare back in 1965. The complete legislation runs more than 2,500 pages - carefully divided into "red tape," "Greek," and "gobbledygook." There are new mandates for individuals, businesses, insurance companies, and healthcare providers, along with new taxes for individuals, businesses, insurance companies, and healthcare providers.
One of the strangest provisions of the new law is the so-called "individual mandate." This rule requires that, by 2014, every American must carry "minimum acceptable coverage" or pay a penalty for failing to do so:
- For 2014, the penalty is $95 or 1% of income, whichever is less.
- For 2015, the penalty is $325 or 2% of income.
- For 2016, the penalty is $695 or 2.5% of income.
- For 2017, that $695 amount is indexed for inflation.
There are exceptions to the rule. If your taxable income is under the federal poverty line, or the cost of coverage is more than 8% of your household income, you don't have to pay. And if your taxable income is less than four times the federal poverty limit, you'll get tax credits to help pay for coverage.
Pretty straightforward, right?
But here's where it gets weird. There's no way for the government to enforce the penalties! In fact, here's what the congressional Joint Committee on Taxation had to say in their explanation:
"The penalty is assessed through the [tax] Code and accounted for as an additional amount of Federal tax owed. However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay such assessments in a timely manner."
That means no interest. No liens. No levies. No jail time for failing to pay the penalty.
It will be interesting to see how many Americans actually pay the new penalty if there's no consequence for failures. Especially when you consider that the only ones subject to that penalty in the first place are the ones who ignored the primary requirement to buy insurance!
We'll be keeping a close eye on health care developments - although we don't expect to see anything quite so odd as a penalty without penalties. In the meantime, call us with your questions - and don't be afraid if you think they sound stupid!
