NCPA - National Center for Policy Analysis


April 26, 2010

About four million U.S. residents will be subject to fines averaging $1,000 per person for failing to obtain health insurance once the new health reform law is fully in effect in 2016, according to a Congressional Budget Office report released on Thursday. 

Penalties for failing to abide by the law's individual mandate will begin in 2014 but will not be fully phased in until 2016: 

  • At that point, U.S. residents who have not purchased coverage will be fined $695 or 2.5 percent of their household income, whichever is greater.
  • After 2016, the fines will increase according to annual cost-of-living adjustments.
  • U.S. residents will be exempt from the penalty if the most inexpensive plan costs more than 8 percent of that individual's income. 

Most of the 21 million U.S. residents who are expected to lack coverage in 2016 will be exempt from the penalties because of low income or undocumented immigrant status, or because they have received hardship or religious waivers, according to the report.  The majority of those paying the fines will be middle-income U.S. residents, the report estimates: 

  • About three million people who will pay the fines will have annual incomes below $59,000 for individuals or $120,000 for families of four.
  • The remaining people facing the fines will have higher incomes.
  • The government could collect about $4 billion annually in penalties between 2017 and 2019. 

Republicans criticized the penalties, noting that President Obama had promised not to raise taxes on individuals whose annual incomes are below $200,000 and families whose annual incomes are below $250,000. 

Source: Associated Press, "Health insurance penalty likely to hit nearly 4 million by 2016," Los Angeles Times, April 23, 2010. 

For CBO report:  


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