By Mark David Blum, Esq.
The I.R.S. is on the hunt. Tasked to do so by the pending Democratic Health Care Reform Act(s), the nation’s internal revenue agency will be collecting data on every person covered by health insurance.
If your employer provides you with health coverage, then your employer is going to have to report that fact to the I.R.S. and include with that information the names of any beneficiaries such as family members to that health care. (Section 161(b) starting at page 107). The bill does not limit what information the Secretary of the Treasury may request, so it is conceivable and likely that information as to the nature of the coverage, the family members included, and other details will be reported to the IRS. The House bill contains similar provisions in section 401(b) (at pp. 175-176).
Then the I.R.S. is to inquire and determine whether someone’s social security number does not line up with a health plan and if the citizen does not provide proof of insurance, then there is a special tax that will be added onto the person’s tax liability. The House bill provides for a tax on people who do not have acceptable coverage at "any time" during the tax year. House bill section 401 provides for a new section 59B (at pp. 167-168) of the Internal Revenue Code:
(a) TAX IMPOSED.—In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of—
(1) the taxpayer’s modified adjusted gross income for the taxable year, over
(2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer.
The Senate version is similar, although the tax is called a "shared responsibility payment" not a tax. Section 161 (at pp. 103-104) words new section 59B of the IRC to require lack of coverage for a month (subject to certain exemptions) before the tax kicks in, and does not specify a specific percentage, but instead, directs that annually
Section 431(a) of the House bill says that the IRS must divulge taxpayer identity information, including the filing status, the modified adjusted gross income, the number of dependents, and "other information as is prescribed by" regulation. That information will be provided to the new Health Choices Commissioner and state health programs and used to determine who qualifies for "affordability credits."
I do not want nor need the Treasury Department investigating why I do not have any health insurance. (When I last checked, a family Blue Cross Blue Shield policy cost approximately $1,100.00 per month and that is out of my price range). My privacy is my own; my life my own.
These reporting provisions would allow the IRS to cross-check income tax returns and health coverage filings, and withhold tax refunds or utilize other collection methods for persons who do not have coverage unless they can prove they have acceptable coverage from some other source. This is similar to the cross-checking the IRS does on income reported separately by the person making the payment and the taxpayer receiving the payment. But for the first time the IRS is not checking for income to tax, but for lack of health coverage.
Revenuers will be on the warpath against small business. If you have employees and do not provide them health coverage, you too will be assessed a new tax. It is referred to as the “pay or play” provision. Either the employer provides health coverage to employees or the employer must also a pay a tax.
Like with the individuals who don’t have insurance and would be subject to paying the government, the health care bill does not call it a tax but instead it is referred to as a “shared responsibility”. Any payments to the government that are mandatory are a tax.
I came a long ways with the President and the Democrats as they sought to bring forth the birth of a new approach to health care and coverage. For sure, I did not buy into the range of fallacies and hyperbole that was used to argue against the proposal. At times I was not comfortable with one section or another.
But this last bit, where the Internal Revenue Service is going to coordinate with the Social Security Administration and the Health and Human Services Commissioner is just too much. It is too much government intrusion into our private lives and how we choose to allocate our resources.
If the government wants to offer low cost basic health coverage for a reasonable fee or I could buy an a la carte policy, then I am in. If my government wants to free up competition in the insurance market, then I am all for that too. But no way should my government be checking and cross checking whether I have insurance or can afford insurance. Maybe I would rather pay the provider directly than give my money to an insurance company. I cannot accept a policy that puts the Internal Revenue Service into the employ of the nation’s health care industry. It is time to go back to the drawing board with the legislation.