Oct 23rd 2013, 16:18:28
I keep running across people who don't understand why the President will not delay the individual mandate, ie the penalty portion of the ACA (Obamacare, PPACA, whatever you want to call it). The general argument is he delayed the employer mandate so why won't he delay the individual mandate.
This requires a little explanation since many people still don't understand the mandate's penalty/fee/tax (also whatever you want to call it). The basic rule is individuals must obtain qualified coverage (an important distinction given many old plans wouldn't qualify) in 2014 otherwise they are assessed a fee on their 2015 tax returns.
Where people appear to be confused is the fee amount. It is $95 OR 1% of your taxable income, whichever is GREATER. It goes up to $325 or 2% in year two. And then it's $695 or 2.5%. So very few people will actually be paying $95 in the first year unless they're over 26 (or don't have a parents plan to latch onto), earning less than $9,500 in taxable income, not on Medicaid, etc. Meaning, the fee is much higher for most people and will likely range from $400-1,000.
This brings us around to why there delay will never occur. Currently, these fees will be assessed in the 2015 tax year. If you delay it for a year, then the first time many people will realize the fee is not a smaller $95 figure is when they submit their taxes between January 1, 2016-April 15, 2016 (or, if they file for an extension, until October 17, 2016--15th is a Saturday). In other words, millions of people would be hit by a large fee in a Presidential election year when they expected a small fee.
So any delay would either be two years or nothing since you want people to incur the fee in an the off-election year. There you have it.
This requires a little explanation since many people still don't understand the mandate's penalty/fee/tax (also whatever you want to call it). The basic rule is individuals must obtain qualified coverage (an important distinction given many old plans wouldn't qualify) in 2014 otherwise they are assessed a fee on their 2015 tax returns.
Where people appear to be confused is the fee amount. It is $95 OR 1% of your taxable income, whichever is GREATER. It goes up to $325 or 2% in year two. And then it's $695 or 2.5%. So very few people will actually be paying $95 in the first year unless they're over 26 (or don't have a parents plan to latch onto), earning less than $9,500 in taxable income, not on Medicaid, etc. Meaning, the fee is much higher for most people and will likely range from $400-1,000.
This brings us around to why there delay will never occur. Currently, these fees will be assessed in the 2015 tax year. If you delay it for a year, then the first time many people will realize the fee is not a smaller $95 figure is when they submit their taxes between January 1, 2016-April 15, 2016 (or, if they file for an extension, until October 17, 2016--15th is a Saturday). In other words, millions of people would be hit by a large fee in a Presidential election year when they expected a small fee.
So any delay would either be two years or nothing since you want people to incur the fee in an the off-election year. There you have it.
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