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Regulation and Compliance > Federal Regulation > IRS

IRS drafts mandate penalty regs

By Allison Bell

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The Internal Revenue Service has drafted a collection of proposed regulations that could determine whether some taxpayers will owe fines for failing to get health coverage.

The individual mandate section in the Patient Protection and Affordable Care Act requires some taxpayers who fail to own a minimum amount of major medical coverage, or “minimum essential coverage,” to pay the fines.

Some sections in the proposed IRS regulations will exempt some people in limited-benefit government programs from paying the fines.

Those affected include state programs for the medically needy, Medicaid pilot programs, and two programs that give people some access to military health care services.

The IRS assumes many enrollees are confused.

Many enrollees probably think the programs can get them out of having to pay the mandate penalty, even though the programs don’t provide enough benefits to do that, officials say in a preamble to the proposed regs.

Another section in the draft regulations could help high-income families that fail to meet PPACA coverage standards.

Normally, for an individual, the penalty will be $95 per year, or, for affected individuals earning more than $9,500, 1 percent of income.

For a family, the usual penalty will be $285 per year or, for affected families earning more $28,500, 1 percent of income.

IRS officials note that regulations they released earlier suggested that PPACA would impose separate “monthly penalty amounts” for “each individual in the shared responsibility family.”

The proposed regulations remove the clause “for individual in the shared responsibility family,” and emphasize that the monthly penalty amount is computed for the taxpayer, not for each individual in the shared responsibility family, officials say.

The draft regulations are set to appear in the Federal Register on Monday. Comments are due 90 days after the official publication date. The IRS may hold a public hearing on the regulations May 21.

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