IRS: Cheapest Obamacare Plan Will Be $20,000 Per
Family
January 31, 2013
By Matt Cover
President Barack Obama hugs HHS
Secretary Kathleen Sebelius and then-House Speaker Nancy Pelosi after signing
the Obamacare law on March 23, 2010. (White House photo/Pete Souza)
(CNSNews.com) – In a final regulation issued Wednesday, the Internal
Revenue Service (IRS) assumed that under Obamacare the cheapest health
insurance plan available in 2016 for a family will cost $20,000 for the year.
Under Obamacare, Americans will be
required to buy health insurance or pay a penalty to the IRS.
The IRS's assumption that the
cheapest plan for a family will cost $20,000 per year is found in examples the
IRS gives to help people understand how to calculate the penalty they will need
to pay the government if they do not buy a mandated health plan.
The examples point to families of
four and families of five, both of which the IRS expects in its assumptions to
pay a minimum of $20,000 per year for a bronze plan.
“The annual national average bronze
plan premium for a family of 5 (2 adults, 3 children) is $20,000,” the
regulation says.
Bronze will be the lowest tier
health-insurance plan available under Obamacare--after Silver, Gold, and
Platinum. Under the law, the penalty for not buying health insurance is
supposed to be capped at either the annual average Bronze premium, 2.5 percent
of taxable income, or $2,085.00 per family in 2016.
In the new final rules published
Wednesday, IRS set in law the rules for implementing the penalty Americans must
pay if they fail to obey Obamacare's mandate to buy insurance.
To help illustrate these rules, the
IRS presented examples of different situations families might find themselves
in.
In the examples, the IRS assumes
that families of five who are uninsured would need to pay an average of $20,000
per year to purchase a Bronze plan in 2016.
Using the conditions laid out in the
regulations, the IRS calculates that a family earning $120,000 per year that
did not buy insurance would need to pay a "penalty" (a word the IRS
still uses despite the Supreme Court ruling that it is in fact a
"tax") of $2,400 in 2016.
For those wondering how clear the
IRS's clarifications of this new "penalty" rule are, here is one of
the actual examples the IRS gives:
“Example 3. Family without minimum
essential coverage.
"(i) In 2016, Taxpayers H and J
are married and file a joint return. H and J have three children: K, age 21, L,
age 15, and M, age 10. No member of the family has minimum essential coverage
for any month in 2016. H and J’s household income is $120,000. H and J’s
applicable filing threshold is $24,000. The annual national average bronze plan
premium for a family of 5 (2 adults, 3 children) is $20,000.
"(ii) For each month in 2016,
under paragraphs (b)(2)(ii) and (b)(2)(iii) of this section, the applicable
dollar amount is $2,780 (($695 x 3 adults) + (($695/2) x 2 children)). Under
paragraph (b)(2)(i) of this section, the flat dollar amount is $2,085 (the
lesser of $2,780 and $2,085 ($695 x 3)). Under paragraph (b)(3) of this
section, the excess income amount is $2,400 (($120,000 - $24,000) x 0.025).
Therefore, under paragraph (b)(1) of this section, the monthly penalty amount
is $200 (the greater of $173.75 ($2,085/12) or $200 ($2,400/12)).
"(iii) The sum of the monthly
penalty amounts is $2,400 ($200 x 12). The sum of the monthly national average
bronze plan premiums is $20,000 ($20,000/12 x 12). Therefore, under paragraph
(a) of this section, the shared responsibility payment imposed on H and J for
2016 is $2,400 (the lesser of $2,400 or $20,000).”
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