6 million will pay Obamacare penalty

The first guestimates from the government have been made that tell us how many people will have to pay a penalty for not having Obamacare-approved insurance plans during 2014.

At least 6 million Americans – between 2 and 4% of taxpayers – will owe the IRS either $95 or 1% of their income, whichever is greater.  But another 10-20% – 20-30 million – will be exempt from the penalty under rules written by the IRS.

There were 7.5 million taxpayers who received a subsidy to pay for Obamacare premiums.  H&R Black thinks that half of those taxpayers will owe the IRS money because the subsidy paid to them was figured incorrectly.

The Hill:

Wednesday's estimates are the clearest picture so far from the administration ahead of ObamaCare's first tax season. The percentages were provided by Mark Mazur, assistant secretary for tax policy at the Treasury Department.

Mazur and senior officials at the Centers for Medicare and Medicaid Services (CMS) emphasized that most people will not face ObamaCare-related hurdles when filing their returns.

About 75 percent of taxpayers — or 112.5 million people — received coverage all year through their jobs and will just need to attest to their coverage by checking a box, officials said on a call with reporters. 

The administration estimates that between 3 and 5 percent of taxpayers — or 4.5 to 7.5 million people — will have received subsidies through the ObamaCare marketplaces, which creates the possibility that some people will owe the government money if they incorrectly predicted their income for the year. Some taxpayers might receive refunds instead.

Mazur did not provide an estimate of how many of the 4.5 million to 7.5 million people who have received federal subsidies will owe the IRS money. One official suggested that even if many of them do, it is unlikely to cancel out their total tax refund. 

"The overwhelming number of people get a refund as it is," the official said. "We don't expect that the amount of settling up will exceed the refund for a very giant number of taxpayers."

Critics of the healthcare law blasted the administration for adding additional criteria to exclude some people from the mandate in 2013 and 2014. 

Under current rules, people in a wide variety of circumstances may be exempt from the mandate, including those who have experienced domestic violence, the death of a close family member, the cancellation of their health insurance coverage or a natural disaster.

The CMS and the Treasury Department are hoping to fend off confusion before tax season ramps up, presenting consumers will new forms and boxes to check related to the healthcare law.

Most of those exempt from the penalty will get a pass this year because the "Affordable Care Act" wasn't even close to being affordable for them.  That's the reality going forward, as we will see perhaps as many as 8 million taxpayers getting rude surprises of one kind or another from the taxman this year.

And it isn't just the penalty or the incorrect subsidy that's the issue.  It's the mass confusion generated by the law's requirements that places a burden on ordinary people.  Many who were previously able to prepare their own tax returns will now likely seek the help of professional tax preparers to guide them through the process of complying with Obamacare reporting requirements.

The problems are only going to grow, as the CBO estimates that up to 10 million Americans who get their health insurance through their employer will lose that coverage and be forced onto the exchanges over the next 5 years.  What was once promised as affordable and as easy to buy as visiting Orbitz.com has turned into a nightmare of red tape and unaffordable plans.

The first guestimates from the government have been made that tell us how many people will have to pay a penalty for not having Obamacare-approved insurance plans during 2014.

At least 6 million Americans – between 2 and 4% of taxpayers – will owe the IRS either $95 or 1% of their income, whichever is greater.  But another 10-20% – 20-30 million – will be exempt from the penalty under rules written by the IRS.

There were 7.5 million taxpayers who received a subsidy to pay for Obamacare premiums.  H&R Black thinks that half of those taxpayers will owe the IRS money because the subsidy paid to them was figured incorrectly.

The Hill:

Wednesday's estimates are the clearest picture so far from the administration ahead of ObamaCare's first tax season. The percentages were provided by Mark Mazur, assistant secretary for tax policy at the Treasury Department.

Mazur and senior officials at the Centers for Medicare and Medicaid Services (CMS) emphasized that most people will not face ObamaCare-related hurdles when filing their returns.

About 75 percent of taxpayers — or 112.5 million people — received coverage all year through their jobs and will just need to attest to their coverage by checking a box, officials said on a call with reporters. 

The administration estimates that between 3 and 5 percent of taxpayers — or 4.5 to 7.5 million people — will have received subsidies through the ObamaCare marketplaces, which creates the possibility that some people will owe the government money if they incorrectly predicted their income for the year. Some taxpayers might receive refunds instead.

Mazur did not provide an estimate of how many of the 4.5 million to 7.5 million people who have received federal subsidies will owe the IRS money. One official suggested that even if many of them do, it is unlikely to cancel out their total tax refund. 

"The overwhelming number of people get a refund as it is," the official said. "We don't expect that the amount of settling up will exceed the refund for a very giant number of taxpayers."

Critics of the healthcare law blasted the administration for adding additional criteria to exclude some people from the mandate in 2013 and 2014. 

Under current rules, people in a wide variety of circumstances may be exempt from the mandate, including those who have experienced domestic violence, the death of a close family member, the cancellation of their health insurance coverage or a natural disaster.

The CMS and the Treasury Department are hoping to fend off confusion before tax season ramps up, presenting consumers will new forms and boxes to check related to the healthcare law.

Most of those exempt from the penalty will get a pass this year because the "Affordable Care Act" wasn't even close to being affordable for them.  That's the reality going forward, as we will see perhaps as many as 8 million taxpayers getting rude surprises of one kind or another from the taxman this year.

And it isn't just the penalty or the incorrect subsidy that's the issue.  It's the mass confusion generated by the law's requirements that places a burden on ordinary people.  Many who were previously able to prepare their own tax returns will now likely seek the help of professional tax preparers to guide them through the process of complying with Obamacare reporting requirements.

The problems are only going to grow, as the CBO estimates that up to 10 million Americans who get their health insurance through their employer will lose that coverage and be forced onto the exchanges over the next 5 years.  What was once promised as affordable and as easy to buy as visiting Orbitz.com has turned into a nightmare of red tape and unaffordable plans.