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Friday, February 1, 2013

ACA 2016 Penalty

I clipped this from the IRS regulation - Internal Revenue Service, 26 CFR Part 1, [REG-148500-12], RIN 1545-BL36.  http://www.irs.gov/PUP/newsroom/REG-148500-12%20FR.pdf   It is an example of how the IRS will calculate “shared responsibility” under the ACA in 2016. For a family of 5 WITHOUT insurance.

Example 3. Family without minimum essential coverage.

“(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).”

The bronze plan is the minimally allowable plan under the ACA.  The math is simple and so is the choice.


  1. Not to put too fine a point on it but this is not a Regulation, which carries practically the weight of law, but a Notice of Proposed Rule Making which carries little weight. It could someday become a regulation, but for now it is, as the name suggests, a proposal upon which they ask for comments (and no doubt they will receive many on this). However, the point is well taken.

    I would say though that if a family of 5 decides to forego having health insurance then they will pay $2,400 and still have no health insurance and will, most likely, cover 100% of whatever medical costs they incur, however much they may be. So, given those factors, the savings, if any, for those who choose to go "naked", especially in the long run, is not as clear cut as presented.

    If they have health insurance but it does not meet the minimum required coverage then they will save, using the example, 20,000 less 2,400 less the cost of the health insurance coverage they have, less the excess, if any, of their out of pocket over what their out of pocket would have been if they had purchased the minimum coverage. Whether or not the result of this arithmetic would be positive or negative obviously depends on a lot of variables.

    If interested here is a pretty good article on some of the complexities involved, such as exemptions and state exchanges, etc.


    1. True it is a proposal. It is my understanding that most of the major financial parameters are covered by the legislation so I expect the final enforcing regulations will be similar to this proposal, at least in the financial numbers.

      The statement that I clipped from the proposed regulation uses the term “shared responsibility payment”. Since the lack of health insurance (in the US today) does not equal lack of health care and I do not wish to deny anyone health care I agree with the goal of “shared responsibility”. My problem (one of them) with the ACA, clearly illustrated by the example in the IRS proposed regulation, is the relatively trivial penalty for not “having” insurance. That does not meet my definition of “shared responsibility”.

      In a previous post under “More change to come” Wayne stated he believes the principal purpose of the ACA is to eliminate employer provided healthcare. I agree, with the addition of the intention (long term) to drive people to a public option.

  2. On another note on ACA enforcement we have this statement from Chiquita Brooks-LaSure (deputy director of policy and regulations for HHS’ Center for Consumer Information and Insurance Oversight) requiring the insurer to provide contraceptive coverage through separate health insurers.

    “No nonprofit religious institution will be forced to pay for or provide contraceptive coverage, at the same time, women who work will have free contraception coverage. They no longer have to pay $100 a year that could be going for rent.”

    What else does she have the power to make “free”