January 6, 2015

Tax Filers to Experience ‘Joys’ of ObamaCare

Welcoming the IRS into the doctor-patient relationship.

This year, the IRS will be fully involved in policing health insurance coverage under ObamaCare, with federal tax forms requiring for the first time that taxpayers report their health insurance status to the IRS. Filers will have to state whether they had employer-paid health insurance coverage in 2014 or received subsidies to help pay for their coverage. Those who did not have coverage face fines of $325 or 2% of taxable income.

Citizens will basically be on the honor system, however, as the IRS says reduced staffing and budgets won’t allow it to check up on every tax return. The IRS operating budget has shrunk by $1 billion since 2010, and it has 13,000 fewer employees – a direct result of Republican attempts to stymie ObamaCare’s implementation. The IRS says it won’t reject tax returns that don’t address the health insurance question, but the agency plans to exercise its audit power. Some filers may be required to file additional forms to prove their health insurance coverage or request one of the 30 different exemptions that currently exist. Open enrollment ends on Feb. 15, though, so the window for filing hardship exemptions is rapidly closing.

An estimated 3.4 million people who cashed in on subsidies may learn the hard way that they received too much money to help cover their insurance, resulting in smaller-than-expected refunds or even larger tax bills. “People will file their tax returns and learn they are subject to a much larger penalty for 2015,” Stan Dorn of the Urban Institute told the Associated Press. “And they can do absolutely nothing to avoid that.”

The problem of people being nailed for back taxes due to ObamaCare is not considered to be a transitional one that will go away after a couple of years. In order to determine whether a subsidy is needed or how much it should be, people will have to be able to predict their medical requirements in advance. Coupled with continual and arbitrary rule changes and a fundamentally flawed method for calculating subsidies, this means millions of taxpayers will be subjected to an IRS drubbing every year.

Companies with 100 or more employees will also be compelled to follow the employer mandate in 2015. Human Resource departments will be churning through a bureaucratic nightmare of paperwork to prove adequate coverage for at least 70% of their employees or companies face a $2,000-per-employee fine. Employers with 50 to 100 workers will face the employer mandate in 2016. Smaller companies remain exempt from the mandate.

The employer mandate has forced companies to deliberately avoid hiring more full-time workers in order to escape the mandate. This behavior is considered to be one of the reasons for the meager jobs recovery as companies look for ways to shave costs in a draconian regulatory environment.

The GOP leadership plans to hold votes to change the ObamaCare definition of a full-time employee from 30 to 40 hours, although the move could raise deficits by $73 billion over 10 years because the government would collect fewer penalties.

Republican tweaks and a Supreme Court ruling notwithstanding, ObamaCare remains a horrible and unconstitutional law that costs our economy and our Liberty big time. Its prescription over the next few months is more pain.

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