Regardless of your feeling towards the Affordable Care Act, otherwise known as Obamacare, there are a number of new taxes which coincide with Barrack Obama’s signature piece of legislature. The taxes may affect some more than others.
There are dozens of new taxes which accompany Obamacare. Some are big, some are small. Some will likely not even affect you, some certainly will. The number one tax most people are concerned with is the ‘individual mandate’ tax. The individual mandate is the tax penalty which requires a person to purchase healthcare coverage. Much has been made of the individual mandate and how it affects Americans. Most people do not realize the tax involved with the individual mandate increases over time. Below is a breakdown of the individual mandate tax over the next several years and beyond:
- 2014 – $95 per person per year or 1% of your Income
- 2015 – $325 per person per year or 2% of your Income
- 2016 – $695 per person per year or 2.5% of your Income
- 2017 – Tax Penalty will increase by the rate of inflation going forward, or 2.5% of your Income
As you can see, there are two penalty options per each non-covered year. Whatever dollar amount is greater is the dollar amount the government will tax you. So, in the year 2014, a single uninsured individual earning $30,000 a year will have to pay a $300 individual mandate tax if they do not obtain health insurance. If the same individual does not obtain health insurance by 2016, they will have to pay a $750 individual mandate tax.
The total penalty cannot exceed the amount it would cost you to obtain the most affordable health insurance plan. Meaning, if an Obamacare “Bronze Plan” cost $800 a year for you, the total tax penalty could only be $800. There are a number of nuances which surround the individual mandate. Each tax payer seeking coverage, or not seeking coverage for that matter, will wind up paying a different amount. Factors include income, family dynamics, and employer to name a few. Obtaining coverage online varies by state, and has been problematic thus far. There are telephone service centers which will walk a person through the process so they may obtain health care coverage.
Obamacare may not be the most agreeable program in America at the moment, but it is here to stay for the foreseeable feature. The only thing certain about taxes is there will always be more, never less, to get used to.