Thanks To The Affordable Care Act, The Cheapest Family Insurance Policy In America Will Cost $20,000 Says IRS


Written By: Rob Port Feb 1, 2013 4:39pm – Say Anything Blog

There’s an old joke among conservatives about government health care programs. It goes something like, “If you think health care is expensive now just wait until it’s free.”

I can’t help thinking about that as I read what the “Affordable Care Act” is doing for the affordability of health insurance in America.

( – In a final regulation issued Wednesday, the Internal Revenue Service (IRS) assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family will cost $20,000 for the year.

Under Obamacare, Americans will be required to buy health insurance or pay a penalty to the IRS.

The IRS’s assumption that the cheapest plan for a family will cost $20,000 per year is found in examples the IRS gives to help people understand how to calculate the penalty they will need to pay the government if they do not buy a mandated health plan.

The examples point to families of four and families of five, both of which the IRS expects in its assumptions to pay a minimum of $20,000 per year for a bronze plan.

“The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000,” the regulation says.

Bronze will be the lowest tier health-insurance plan available under Obamacare–after Silver, Gold, and Platinum. Under the law, the penalty for not buying health insurance is supposed to be capped at either the annual average Bronze premium, 2.5 percent of taxable income, or $2,085.00 per family in 2016.

That gap between what a health insurance policy is going to cost in this coming era of Obamacare, and what the tax will be if you don’t buy a policy, could well be what does the law in. George Will referred to this problem in a column a couple of weeks ago.

The Supreme Court upheld the legality of the individual mandate based on the idea that the mandate’s penalty was a tax and not a penalty. But the Supreme Court noted in its ruling that the difference between a tax and a penalty is a matter of degree. As long as the tax for not buying health insurance stays low enough to not be considered punitive, it’s a tax. But if it’s raised, it becomes a penalty.

This is all a lot of nonsensical parsing, of course, but what it does mean is that if the federal government intends to raise the tax for not having health insurance the law is susceptible again to being overturned by the courts. But if they leave it as low as it is now, a lot of Americans are going to see the big difference between paying the tax and paying for cost-inflated health insurance and opt for the former.

And who could blame them?

About Ask Marion

I am a babyboomer and empty nester who savors every moment of my past and believes that it is the responsibility of each of us in my generation and Americans in general to make sure that America is as good or even a better place for future generations as it was for us. So far... we haven't done very well!! Favorite Quotes: "The first 50 years are to build and acquire; the second 50 are to leave your legacy"; "Do something that scares you every day!"; "The journey in between what you once were and who you are becoming is where the dance of life really takes place". At age 62 I find myself fighting inoperable uterine Cancer and thanks to the man upstairs and the prayers from so many people including many of my readers from AskMarion and JustOneMorePet... I'm beating it. After losing our business because of the economy and factors related to the re-election of President Obama in 2012 followed by 16-mos of job hunting, my architect-trained husband is working as a trucker and has only been home approximately 5-days a month since I was diagnosed, which has made everything more difficult and often lonely... plus funds are tight. Our family medical deductible is 12K per year for two of us; thank you ObamaCare. But thanks to donations from so many of you, we are making ends meet as I go through treatment while taking care of my father-in-law who is suffering from late stage Alzheimer's and my mother-in-law who suffers from RA and onset dementia as well as hearing loss, for which there are no caretaker funds, as I continue the fight here online to inform and help restore our amazing country. And finally I need to thank a core group of family, friends, and readers... all at a distance, who check in with me regularly. Plus, I must thank my furkids who have not left my side through this fight. You can see them at JustOneMorePet.
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6 Responses to Thanks To The Affordable Care Act, The Cheapest Family Insurance Policy In America Will Cost $20,000 Says IRS

  1. Doug Hudson says:

    “Using the conditions laid out in the regulations, the IRS calculates that a family earning $120,000 per year that did not buy insurance would need to pay a ‘penalty’ (a word the IRS still uses despite the Supreme Court ruling that it is in fact a ‘tax’) of $2,400 in 2016,” the report adds.

  2. Early experience under PPACA was that, as a result of the tax credit for small businesses, some businesses offered health insurance to their employees for the first time.

  3. • If an you or your family chooses not to purchase healthcare through the Online Health Insurance Exchange, they can still buy private insurance, get insurance through work or Medicare / Medicaid. Those who chose to not purchase insurance will pay an income “penalty” tax to help cover the rest of us. In other words it’s a tax, not a mandate, no one is actually forcing you to have health insurance.

  4. Jody Meyer says:

    • ObamaCare requires that all Americans have health insurance either through a private provider or through a state or federal assisted program. If you don’t have insurance you must pay a tax equal to 1% of your income in 2014 and 2.5% in 2016.

  5. For a pretend example: XYZ Company has health costs of $12,000 per employee, per year. The Obamacare tax is $8,000 per employee per year. XYZ Company is going to pay the Obamacare tax, cancel their employees’ health insurance plan and dump their employees into the government health exchanges wherever they can. It will simply be cheaper for them to pay the tax and let the government pay for health care.

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