Obamacare Tax Increases Hit Millions
Next Monday is tax day for most of the country, and the penalties for not buying Washington-approved health insurance are higher than ever. In 2014, the tax penalty for being uninsured was $95 per adult and $47.50 per child or 1 percent of household income — whichever was greater. These penalties went up significantly for tax year 2015: $325 per adult and $162.50 per child or 2 percent of household income — whichever is greater. Penalties for 2016 will be even higher, rising to $695 per adult and $347.50 per child, or 2.5 percent of income.
Last month CBO and JCT projected that about 3 million people will pay the penalty for being uninsured in any given month in 2016. Even though Americans are required to have “minimum essential coverage” or pay these increasing penalties, many Americans are still choosing to forgo health coverage. Before Obamacare was signed into law — and as recently as a year ago — CBO predicted that 21 million Americans would enroll in coverage through Obamacare’s exchanges in 2016. This year, CBO dropped its projection to 12 million.
Along with Obamacare’s new taxes comes new IRS paperwork. Americans will get one or more forms from their insurers or employers this year verifying that they had Washington-approved coverage: Form 1095-A; 1095-B; or 1095-C. Form 1095-B is for those who work for small employers or who purchased health insurance privately. Form 1095-C is for those who work for large employers, those with 50 or more employees. The Obama administration gave employers until March 31 to send 1095-B and 1095-C forms to workers. People need the forms in order to fill out the “individual responsibility” section of their tax returns.
Form 1095-A debuted last year. It is for those who buy health insurance through the Obamacare exchanges. Tax filers who get health insurance through exchanges need this to complete Form 8962 to claim or confirm Obamacare’s premium tax credits. Those who earned more last year than they expected may need to pay back part of the subsidy they received.
OBAMACARE HITS SMALL BUSINESSES
Companies with 100 workers or more have had to deal with the burdens of the employer mandate since January 2015. As of January 2016, employers with 50 to 99 workers are also subject to the mandate. The requirement will increase pressure on small business owners and their employees. With wages stagnant across the economy, this is bad news for millions of workers.
According to a recent survey by ADP, 52 percent of midsized business and 45 percent of large employers were unsure if they are at risk of violating Obamacare compliance rules this year.