THE INDIVIDUAL MANDATE: 2007 TAX FORMS AND THE 2008 PENALTY

2007 Taxes
The calendar year 2007 tax season has begun. There is a new tax schedule that will be required that will collect information about tax filers' health coverage. This schedule, known as Schedule HC, can be found at this link: http://www.mass.gov/Ador/docs/dor/health%20care/HC.pdf Instructions for completion of this schedule can be found at this link: http://www.mass.gov/Ador/docs/dor/health%20care/HC%20instructions.pdf

Private health plans will be issuing statements (called Form 1099-HC statements) to subscribers that should be used as proof of coverage when filing taxes. Those who are on MassHealth or Commonwealth Care will not receive a statement, because the state can cross-check state databases to prove their coverage status. These individuals will simply need to indicate that they have MassHealth or Commonwealth Care on their tax form.

The penalty for not having health insurance as of December 31st, 2007, is loss of the state income tax exemption of $219. Penalties only apply to those who have access to “affordable” coverage. Schedule HC can be completed to determine whether or not someone had affordable coverage available to them; individuals do not need to determine this ahead of time, although they may (using the attached worksheet).

2008 Taxes
Penalties are higher in 2008. When individuals file their calendar year 2008 taxes in 2009, they will be penalized for every month in 2008 that they were uninsured. This means that penalties are already accruing for those without health insurance. 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.

Bottom line: 2008 penalties will range between $0 and $76 per month, and $0 and 912 per year, depending on an individual's age and/or income.

Penalty categories —

  1. Income under 150% of poverty (FPL) – no penalty.
  2. *Income between 150-200% FPL – $17.50 per month/$210 per year
  3. *Income between 201-250% FPL – $35 per month/$420 per year
  4. *Income between 251-300% FPL — $52.50 per month/$630 per year
  5. Income above 300% FPL and Age 18-26: $56 per month/$672 per year
  6. Income above 300% FPL and Age 27+: $76 per month/$912 per year

150% FPL = $15,324 for family of one; $20,544 for family of two
200% FPL = $20,424 for family of one; $27,384 for family of two
250% FPL + $25,536 for family of one; $34,326 for family of two
300% FPL = $30,636 for family of one; $41,076 for family of two


*Categories 2, 3 and 4 apply only to individuals:

  1. Who are eligible for MassHealth or Commonwealth Care, the state’s new subsidized insurance program; OR
  2. Who are eligible for employer sponsored coverage, AND whose premium contribution is no higher than comparable Commonwealth Care premiums.

If you are not eligible for affordable employer coverage, MassHealth, or Commonwealth Care and lack coverage, you face no penalties.

-Adapted from: Health Care For All News -- January 2008, January 02, 2008; the HCFA blog http://blog.hcfama.org/?p=1363, and “Mandate to have Health Insurance: Reminders and Updates”, from Kim Simonian, MPH, Partners Community Benefits, January 06, 2008.

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