Once the Patient Protection and Affordable Care Act (PPACA) is implemented in 2014, virtually all uninsured United States residents will have to pay a tax penalty for not getting health insurance. There are a few exceptions to the tax penalty for financial and religious reasons.
New estimates from the Congressional Budget Office (CBO) state that six million Americans will be affected by the tax penalty when it is completely in effect in 2016. While that’s still a small sliver of the pie, considering more than 150 million people are covered by employer sponsored health insurance, it is up 50% from the original estimates the CBO made.
The office stated the increase was due to changes in economic, unemployment, and wage projections. A small portion of the increased estimate is because states are no longer required to expand Medicaid eligibility.
The individual tax penalty in 2016 will be $695, or 2.5% of income, whichever is higher. It is expected that some individuals may choose to remain uninsured because the tax penalty could be less than costly insurance plans, which average around $4,300 for an individual plan.
In response to the CBO report, the Department of Health and Human Services (HHS) stated that, “98% of Americans won’t be affected,” and that the penalty will “only affect people who can afford health care but choose not to buy it”.
The individual tax penalty will be phased in, starting in 2014 at $95 and bumping up to $395 in 2015.
