The Individual Mandate Gets Real II

This is the Department of Revenue press release just issued (click here for more, including draft regulations; a public hearing on the regulations will be held on February 4):


The Massachusetts Department of Revenue issued draft guidelines today on tax penalties for not having health insurance in 2008.

Penalties will apply only to adults who can afford health insurance, based on separate standards established by the state Health Connector on an annual basis and subject to hardship appeals. While the 2007 penalty is the loss of the personal exemption worth $219 on an individual’s state tax return, the 2008 penalties will be based on one-half the lowest cost plans available through the Connector as of January 1, 2008. Under the draft guidelines, the penalties will range from zero to $912 for an entire year without coverage.

“These proposed guidelines are a direct reflection of the responsibility given to us by the landmark Massachusetts health care reform law as the Commonwealth tries to enroll nearly all adults in health insurance plans,” said Revenue Commissioner Henry Dormitzer. “With nearly 300,000 newly insured, the state is well on its way to achieving its goal.”

DOR has worked to ensure that these penalty guidelines are easy to understand, streamlining the schedule to establish only a handful of penalty categories. The penalties will accrue each month an individual does not have health insurance in 2008 and will be due as part of the tax filing process for the year.

Individuals up to the age of 26 with incomes too high to qualify for subsidized health insurance will face a penalty of $672 for an entire year without coverage. People with similar incomes age 27 and over will face a potential annual penalty of $912. Subsidized insurance is available to individuals earning up to $30,636 per year. For a family of four, the threshold is $61,956.

Individuals who meet the income guidelines for subsidized insurance through either the Commonwealth Care program offered by the Health Connector or MassHealth will be penalized based on four income ranges.

Individuals earning up to $15,324 will face no penalty since Commonwealth Care is free for people at this income level. This income cohort represents the largest number of newly insured.

Those earning between $15,325 and $20,424 will face a penalty of $210 per year if they were uninsured the entire year.

For individuals earning between $20,425 and $25,536, the 2008 penalty would be $420 if they were uninsured the entire year.

Individuals earning between $25,537 and $30,636 face a penalty of $630 for the year.

“We have worked to craft these penalties in a manner that is straightforward and easy to understand.” said Dormitzer. “We hope they will help encourage people who can afford health insurance to buy it and enjoy its many benefits.”

Comments on the draft penalty schedule can be emailed to the Department of Revenue’s Rulings & Regulations Bureau at by January 15, 2008.

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2 Responses to The Individual Mandate Gets Real II

  1. John says:

    When it comes to health insurance, the plan that would hurt our economy the least is Hillary Clinton’s plan. Everyone would have health insurance. WA, NJ, NY and a few other states who have already tried Obama’s proposed health insurance plan of not mandating coverage. These states have driven out of the better insurance companies. When anybody can get health insurance without having to go through medical underwriting, people won’t get coverage until they absolutely need it. Usually because of a serious illness. This causes health premiums to sky-rocket. That’s because insurance companies are only paying claims for unhealthy people. The plans in these states tend to not be that great either. If everyone has health benefits, the premiums would be less because healthly people would factor in on determining the premium.

  2. Minimum Creditable Coverage is a tax says:

    The DOR really screwed this one up by reducing the penalties. For a year, brokers have been telling their clients that the fine was 1/2 the least expensive premium per month. Now the DOR has reduced it to a maximum of $912 per year or 75 per month.

    In the last 4 days, I have had more clients that were first time health insurance buyers tell me that they will cancel their plans and just pay the fine. Let’s take an average client of mine. Self employed tradesperson with a family of 4 grossing between 65-125K per year with no health insurance. Only rarely carries insurance and only then when the spouse works. They normally pay out of pocket for their expenses. They sign up with a very basic plan for 750 per month to avoid a fine of 4-6K. Now they can pay the fine of 1800(912 x 2) and save themselves 7200 per year. They pay 1k for out of pocket stuff and have a net savings of 6K or so.

    So this time don’t blame this one on Romney because Dormitzer is a Patrick appointee.

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