CBO Lowers Estimate of Uninsured Who Will Pay PPACA Penalty: 5 Things to Know

The Congressional Budget Office has lowered its projections concerning the number of people who will pay penalties in 2016 for not having health insurance under the Patient Protection and Affordable Care Act.

Under the PPACA's individual mandate, most Americans are required to get health insurance or pay a fine. The fine is either a flat dollar amount (which will increase from $95 in 2014 to $695 in 2016) or a percentage of household income (which starts at 1 percent in 2014 and rises to 2.5 percent in 2016), whichever is greater. Factors such as recent regulations and economic changes have contributed to the CBO's decision to lower the expected number of people who will pay the penalty two years from now. Here are five key things to know from the report.

1. The Congressional Budget Office and Joint Committee on Taxation estimate 30 million nonelderly Americans will be uninsured in 2016. However, many of them will be exempt from the individual mandate penalty. The following people are exempt:

  • Unauthorized   immigrants, who cannot receive almost all Medicaid benefits and subsidies to purchase coverage through the health insurance exchanges.
  • People with income low enough that they don't have to file an income tax return.
  • People with incomes below 138 percent of the federal poverty level whose state of residency hasn't expanded its Medicaid program.
  • People whose health insurance premium exceeds a specified portion of their income (8 percent in 2014 and indexed over time).
  • Those who are incarcerated.
  • Members of American Indian tribes.

2. According to the CBO and JCT, an estimated 23 million uninsured people in 2016 will qualify for one of the exemptions. Of the remaining 7 million, some will also be excused from paying the penalty because of hardship or other reasons.

3. Overall, about 4 million people will pay a total of $4 billion in fines for being uninsured in 2016, according to the report.

4. In 2016, people with household incomes that are or exceed 400 percent of the federal poverty level will account for most of the penalty payments. These households will account for 61 percent of the roughly $4 billion collected from individual mandate fines that year.

5. The CBO and JCT have lowered the projected number of people who will pay penalties in 2016 by about 2 million and the expected amount collected in fines by $3 billion since September 2012. The decrease stems from a rise in the number of people who the CBO projects will be exempt from the penalty, partly because of HHS and U.S. Treasury regulations issued since 2012 and partly because of changes in the economic outlook.

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