There's the version of tax resolution the late-night commercials sell you. Then there's how it actually works. I'm Darrin Mish, a Tampa tax attorney. I've spent 32 years on the inside of these cases. Here's the real version.<\/p>\n
The new healthcare law that mandates most Americans to buy health insurance by 2014 and insurance companies to accept them regardless of their health conditions has caused no small storm of controversy.\u00a0 And the fact that the IRS has been tasked to facilitate its enforcement has likely added fodder to the debate.\u00a0 According to the law, if you fail to purchase health insurance by the stipulated time, you are liable to pay a fine administered by the IRS.<\/p>\n
But what if you do not pay the fine?\u00a0 IRS Commissioner Doug Shulman has confirmed that in such an event, the IRS will not chase you for it.\u00a0 However, they will send you a letter.\u00a0 The healthcare law prohibits the IRS from taking measures to get you to pay the fine such as pressing criminal charges or seizing assets.\u00a0 But the law does provide for the IRS to garnish your future tax refunds.<\/p>\n
The new healthcare fines go into full effect in 2016.<\/p>\n
Various parties have criticized the constitutionality of such a healthcare bill while others say the penalties for noncompliance are too weak to be truly effective.\u00a0 The fines for not purchasing health insurance could come up to $695 or 2.5% of taxable income, which is far less than the annual health insurance premium.\u00a0 Some people have taken Shulman\u2019s comments as the reason why the fines would not be effective.\u00a0 If the IRS does not hunt the breakers of this law, then people who choose to save on their money by not buying the insurance will be further emboldened to do so regardless of the fine.<\/p>\n
On another note, people may choose to pay the fines until such time when they feel they need the insurance coverage because insurance companies are mandated to accept them regardless of pre-existing health conditions.\u00a0 In Massachusetts, the only state that requires its citizens to carry health insurance, thousands of people are choosing to buy health insurance only when they are about to incur expensive medical expenses like major surgeries.<\/p>\n
On the other end of the spectrum are those who support the healthcare bill.\u00a0 They say that most Americans without health insurance are uninsured because they cannot afford it not because they do not want it.\u00a0 Thus the healthcare bill provides a means through government subsidies to finally afford this necessity.\u00a0 Thus the supporters of the bill do not foresee most Americans will reject taking up health insurance.<\/p>\n
In their effort to help people afford the rising cost of healthcare, the government has had to introduce this controversial bill that mandates insurance companies to accept proposers for insurance regardless of their health conditions.\u00a0 But to balance the equation, if the insurers must accept whoever who purchases insurance then the people must be compelled to buy it.\u00a0 This is to ensure a fair spread of insured persons of all health conditions and prevent people from trying to game the system by only buying insurance when they are about to get seriously sick.<\/p>\n
Nevertheless the aspirations of the healthcare bill will only be achieved with proper enforcement which includes effective penalties for breaking this law.<\/p>\n