About 4 million people are expected to pay a penalty for not buying health insurance in 2016, an amount estimated at about $4.2 billion to $4.3 billion per year over the 2017 to 2019 period when provisions of the new healthcare reform law kick in.
But two thirds of that penalty amount will be paid by people whose adjusted gross income is more than 400% of the federal poverty level.
Those are some estimates yesterday from the Congressional Budget Office, which suggests that some of the money is likely to be collected from people who voluntarily pay the fine on their income tax returns, "as well as the ability of the Internal Revenue Service (IRS) to administer and collect the penalty."
Whether that means audits are likely to collect the difference was not made clear.
The new law takes effect in 2014, but it is expected that the penalties will not be collected for another year. The CBO says that the penalty amount rises to $695 by 2016 and is indexed by inflation thereafter.
The CBO estimates that about 21 billion non-elderly U.S. residents will be uninsured at that time, but most will not be subject to any penalties in 2016. Those excluded from the mandate to buy health insurance coverage or pay the penalty include unauthorized immigrants who are exempt. Others are subject to the mandate to buy insurance policies but will not be required to file an income tax return because they are members of Indian tribes, or because the premium they would have to pay would exceed a specified share of their income.
That share is initially 8% in 2014.
According to a chart accompanying the CBO briefing paper, $2.3 billion would come from those whose adjusted gross income (AGI) is more than 500% of the federal poverty level (FPL), and $500 million would come from those whose AGI is between 400% and 500% of FPL. Another $500 million would come from those with AGI between 300% and 400% of FPL, and another $500 million from those with AGI between 200% and 300% of FPL. $300 million would come from those with AGI between100% to 200% of the FPL and $200 million would come from those with AGI that is less than 100% of the FPL.
In 2016, the FPL is projected to be $11,800 for a single person and about $24,000 for a family of four.
The largest number of those paying a fine are expected to be those earning more than 500% of the FPL, or nearly one million people, but one third of those paying a penalty will be those earning 400% or more of the FPL, paying an amount that will be about two-thirds of the $4.2 billion.
It remains unclear, however, how the IRS will collect much of those funds and whether audits specifically geared to examining tax returns for health plan premium payments will be ordered.
Earlier this year, some Republicans estimated that the IRS would have to hire as many as 16,500 new agents, much of the added $10 billion a previous CBO estimate said the IRS would need to enforce the Patient Protection and Affordable Care Act.
It's also unclear whether the people who avoid paying either health plan premiums or the penalty are more likely to be those healthy, young citizens who don't think they will need healthcare or that they could possibly be caught.