By now you surely know that the Supreme Court has upheld the individual mandate and officially have declared it as a “tax.” Doesn’t having a sense of closure feel amazing? Hopefully, you are picking up on the sarcasm, here. The truth is, after the Supreme Court’s decision was announced many Americans found themselves asking – “How is this whole thing going to work, again?”
Good question! Things are actually going to have to be “re-worked” quite a bit (and the clock is ticking). This excellent article by Stephen Ohlemacher of the Associated Press uncovered a ton of information.
Let’s have a Q&A session, shall we?
I heard there was a penalty (tax) if I don’t purchase health insurance. What’s the deal?
You heard right. As of 2014, Americans who do not purchase health insurance will pay a tax. The amount will be fully phased by 2016. It will be $695 for each adult or 2.5 percent of family income, whichever is greater, up to $12,500.
Is anyone exempt from having to purchase health insurance?
Yes. You do not have to purchase health insurance if:
- Your income is so low that you cannot afford it
- Your religious beliefs keep conflict with receiving medical care
- You are a member of the American Indian tribes
Can I get in major legal trouble if I refuse to pay?
No. There are no civil or criminal penalties for refusing to pay and your wages cannot be garnished. Also, no interest will accrue on an unpaid penalty.
However – the IRS will send letters. Scary ones. Nobody wants a scary letter from the IRS. The IRS also can threaten to withhold your tax refund, and nobody wants that, either.
What about these ‘premium tax credits’ I keep hearing about?
These are tax cuts that Americans will receive in return for purchasing health insurance. The average credit will be $4,000 for more than 20 million middle-class families.
How does the IRS plan on keeping up with all the new rules and regulations?
They are staffing up big time. The IRS is expected to hire more than 2,700 workers and do a major overhaul on their current computer system. The estimated price tag for all of this is $881 million.
