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Taxing the Uninsured: The Latest Estimates
William McBride, PhD
On June 28, 2012, the U.S. Supreme Court upheld the Patient Protection and Affordable Care Act (ACA),
also known as “Obamacare,” as a legitimate exercise of Congress’ power to tax. Our brief to the Court
asserted that the individual mandate is a penalty and not a tax,1 so the Court’s conclusion that it is a “tax”
raises certain questions. How will it work? How will it affect families’ tax bills? How might it change
The ACA “tax” for not purchasing health insurance is a little complicated. Effective January 1, 2014, most
Americans without health insurance will be required to make a payment to the U.S. government. Once fully
in effect, it is the greater of:
A. A flat amount of $695 per adult taxpayer plus $347.50 per dependent under 18. This is the fully
phased in amount in 2016, which is adjusted for inflation thereafter. In 2014 it will be $95 per adult
plus $47.50 per dependent. In 2015 it will be $325 per adult plus $162.50 per dependent. The flat
amount per family cannot exceed three times that for a single individual.
B. 2.5 percent of income over the filing threshold2 for federal income taxes. The threshold for 2011 was
$9,500 for most single filers, $19,000 for most married filers, and $12,200 for heads of household.
It is indexed to inflation.
The total tax cannot exceed the national average premium for “bronze level” qualified health plans offered
through exchanges, where bronze plans are those that cover 60 percent of expenses for a standard
population. The Congressional Budget Office (CBO) estimates that in 2016 this average premium would be
about $4,750 for single policies and $12,250 for family policies. 3
1 Richard Morrison, Supreme Court’s Health Care Tax Verdict Flawed, http://taxfoundation.org/article/supreme-courts-health-care-
2 Internal Revenue Servi