Myth Buster: No jail time for uninsured
Filed under: Health, Tax - Credit, Insurance - Health Insurance
You'll find numerous blogs out there threatening jail time for the uninsured, but don't believe them. This is just another scare tactic to prevent health insurance reform. While it's true there are penalties for those who choose not to get insurance, that penalty is 2.5% of one's income and the penalties will be collected by the IRS. Jail time is not likely. In fact criminal prosecutions by the IRS are rare. Of 156 million individual tax returns filed in 2008, only 100 resulted in criminal prosecutions for those who willfully defrauded the system. The penalty will only impact those who are wealthy enough to pay for insurance and choose not to pay. The intent is that this penalty will be used to pay for the medical needs of those who choose not to get insurance.
The fact of the matter is that right now the uninsured are costing every American $1,017 in insurance premiums to cover the medical expenses of the uninsured. That's $42.7 billion this year. Under the House Affordable Health Care for America Act, Americans will be responsible for purchasing health insurance coverage and most employers will be responsible for offering coverage. Individuals, employers and the government will all be contributing to the system to be sure every American has health coverage.
Most Americans will find health insurance more affordable:
- Starting in 2013, there will be a sliding scale of affordability credits for individuals and families up to 400% of the poverty level. These credits will phase out at earnings levels of $43,320 for single people and $88,200 for a family of four based on the 2009 poverty levels.
- The sliding-scale credits limit individual family spending on premiums for the essential benefit package to no more than 1.5% of income for those in the lowest income and phasing up to no more than 12% of income for those at 400% of poverty level. So the most an individual earning $43,320 could pay for insurance annually is about $5,200 and insurance for a family of four would max out at $10,584.
- The essential benefits package caps total out-of-pocket spending to prevent bankruptcy by limiting exposure to catastrophic costs. Total out-of-pocket expenses cannot exceed $5,000 for an individual or $10,000 for a family. For lower-income households the out-of-pocket cap ranges from $500 for an individual and $1,000 for a family.
- Medicaid eligibility will start at 150% of the poverty level ($16,245 for an individual in 2009).
Businesses with payrolls over $500,000 will pay a penalty of 2% if they do not provide health insurance which will be used toward the government insurance exchange so their employees can purchase health insurance. The penalty rises to 8% for companies with annual payrolls over $750,000. Many small businesses will be eligible for a tax credit for health insurance offered to their workers.
So don't listen to the scare tactics. You won't be going to jail if you don't buy health insurance, but the IRS may try to collect a 2.5% penalty. That's $2,500 on a $100,000 taxable income.
Lita Epstein has written more than 25 books including Working After Retirement for Dummies.
Reader Comments (Page 1 of 1)
11-16-2009 @ 10:21AM
Ron said...
Both the "journalist" and the editor for this story should be fired.
"The penalty will only impact those who are wealthy enough to pay for insurance and choose not to pay."
BS
The law states that anyone with income high enough not to be subsidized that does not buy insurance has a fine 2.5% of income, AND IF YOU DO NOT PAY THE FINE, IT IS A FELONY, PUNISHABLE BY JAIL.
Don't pretend the provision is not in there, just because you don't believe that it will be used.
Liars.
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11-16-2009 @ 10:58AM
Sam said...
100 criminal prosecutions for 2008 filers...........this statement like the entire article is full of holes. 2008 tax returns are not even being actively audited as of this date........it usually takes two to three years for the IRS to catch up with its audits. Now, the IRS is looking at 2006, 2007, and earlier returns. Later on next year, some 2008 returns will start to be examined. Regardless of jail time or not, a felony is a felony.......Want One on Your Record?
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11-16-2009 @ 11:30AM
Carl Lyles said...
This article is so full of "should be" and "will more than likely" that it shows just how gullible or complicit this idiot journalist is.
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11-16-2009 @ 11:38AM
MissEmilySmith said...
Article reads like a Pelosi/Obama staffer wrote it. Chock full of BS amateur propaganda.
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11-16-2009 @ 12:10PM
Brandon said...
This is a ridiculous article. As a CPA, I can tell you...people DO go to jail for refusing to pay taxes, no matter what this misinformed journalist may say. The IRS is also very good at seizing assets to pay tax bills, which would be just as bad in my opinion.
This is the first time in American history that the Federal government will force an American citizen to purchase something, an unconstitutional act if you ask me.
"Ohh, well what about car insurance, you hatemonger?" people will say. No one forces you to buy a car. You can walk. This stupid law will affect anyone who works for a living.
Also, I've never gotten a job from a poor person. Most rich people hire others to work for them. If you slam the rich with new taxes to pay for healthcare, they are just going to have less money that could have been used to hire entry-level workers. This liberal policy makes no sense at all, especially in our current employment situation.
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11-17-2009 @ 7:00PM
Charles Morgan said...
Umm the original fine is $200,000 and 5 years in jail, have not been able to find if it has changed or not.
This was stated on the floor.
11-16-2009 @ 12:20PM
Lita Epstein said...
The first person sentenced in the UBS case who evaded taxes on millions of dollars didn't get jail time:
http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200910281302DOWJONESDJONLINE000724_univ.xml
It's ridiculous to think that some who evades paying a few thousand in fees would be treated more harshly.
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11-16-2009 @ 4:09PM
Corey in GA said...
But he paid all fees, fines, etc willingly.
What if someone said, "I have sufficient monies to pay and have a $25k deductible. I won't pay that, and I won't be ridiculous government fees and penalties for insurance I don't need."
You're saying that this person wouldn't be greeted at the door with armed police to forcibly take assets and jail him/her for "contempt of court"?
The health care "reform" WILL be enforced with jail time and no amount of situational "nuanced" reporting will change that.
11-17-2009 @ 9:39PM
Todd Shindler said...
What an idiotic and gullable person you sound like!!! Just because you can point to 1 case where someone didn't receive jail time for tax evasion, doesn't excuse the truth thats in the bill, that you will be fined if you don't purchase the governments healthcare and secondily, the IRS can pretty much do what they want to do. YOU IDIOT WAKE UP AND GO TO CANADA IF YOU WANT GOVT. HEALTHCARE!!!!!!!!!!!!!!!11
11-16-2009 @ 2:15PM
Mike said...
If they aren't prepared to use the option of jail time then why is it even in the bill???
The bill is FULL of pork and full of nonsense that really shouldn't have been in the bill in the first place. Is it REALLY necessary to force vending machine owners to post the nutritional values of the products? I mean, really? Does a rule like this need to be in this stupid bill?
Our health care system needs some help, but the ideas (especially THIS bill) coming out of Washington are worse, a thousand times worse than what we are dealing with now. If my car needs new tires, I don't go out and buy a whole new car. Well our health care system needs work, but it did not need this idea of we'll throw the baby out with the bath water and start again.
You are one BIAS reporter. Stick with the facts. The FACTS ARE that they CAN put you in jail if you don't have health care insurance.
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11-16-2009 @ 2:37PM
brian said...
This reporter must be part of the Obama-Pelosi-Reed useful idiot brigade. There is a reason JAIL TIME is in the bill!! It is the gun pointed at every American who does not want any part of this idiotic bill. You see the only way liberals can get people to do what they want is by pointing a gun at them, i.e. jail-time, fines, seizure of assets, excessive regulations, etc.
Hitler, Pol-Pot, Lenin, Stalin, Castro, etc used the last refuge of a scoundrel--MURDER--to get their way. Why wouldn't these idiots in power in the US not use jail time? Lady you need to wake up and smell the coffee. Stop being a useful idiot!!
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11-18-2009 @ 2:14PM
badfrog said...
Do we really need our government doing this? How big a government do we really need? How much government can we afford to pay for? Including all the pork and payoffs?
Medical care is too expensive because everybody has their hands in the Dr.'s pockets. Malpractice takes between 25 and 40% of a Dr.'s gross in my state. We need tort reform. Smothering regulations require extra employees, and more regulations and taxes make them more expensive, and harder to fire. And so on.
Tort and tax reform would drop the price of medical care by well over 50%. My Dr told me that he takes home less than 10% of what he takes in, mostly from insurance, taxes and fees. Without insurance and tax regs and paperwork he would only need two employees instead of four.
You can argue with my details and numbers, but you know that this is correct.
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11-18-2009 @ 1:02AM
Victor said...
This woman who wrote is SERIOUSLY delusional if she think the the IRS will simply ignore people who evade this new tax. The Government is the only entity that claims the right to put a bullet in your head if you don't pay a freakin parking ticket! Yes, I am serious. If you resist paying a parking ticket sufficiently, eventually, men with guns will show up at your residence to take you to jail for failure to pay. If you resist armed men you will be at the very least tazed and if you resist long enough killed (either by tazing or bullets). Since most people sheepishly comply with the Government they don't realize that EVERY obligation imposed on them by the Government has with it the threat of violence against them as the punishment for noncompliance, if you resist long enough. The same punishment would be metted out for anyone refusing to pay this Health Care Tax. Wake up people! The Government is not your friend anymore than a Road Side Bandit is.
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11-19-2009 @ 3:24PM
PBC Resident said...
The IRS usually doesn't send you to jail. They just take all of your possessions. I've been to IRS tax auctions. I've searched the public records and found Mr Smith owed $2k in taxes. The IRS hits him with a fine. Before long, Mr Smith now owes $50k in fines. He can't pay, so the IRS seizes his house and car.
If the uninsured are costing us $40billion as the article you referred to states, then why do we want to double that cost? It's estimated that 20 million of these uninsured will be given subsidies or put into medicaid. That's a cost of about $5.5k per individual. Add it up, the taxpayer will now be shelling out $100billion.
The most an individual earning $43,320 could pay for insurance annually is about $5,200? That's $400 a month he NOW has to shell out for a product he most likely doesn't want or need. You are forcing him to have a 12% pay cut. If he pays the fine, he will have to give up 2.5% of his income to the IRS and still have no insurance. I thought the president promised he would not raise taxes on those making less than $250k?
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1-12-2010 @ 8:32PM
scopo911 said...
I don't know what country the person that wrote this article is living in, but last time I checked people are going to jail all the time for not paying their taxes and this is exactly what this is, a TAX.
The title of this article is misleading at best: Myth Buster: No jail time for uninsured
...yet in the first paragraph the author says "...jail time is not likely" and the IRS rarely prosecutes people that don't pay their taxes. WHAT???
Come on, at least be honest. If you support this legislation, you support putting people in jail that don't want to buy health insurance. What's wrong with just saying that? I don't believe it, but obviously some people do - so just say it!
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