CBO Doubles Estimate of How Many Will Pay Obamacare Penalty

Nearly 6 million Americans — significantly more than first estimated — will face a tax penalty under President Barack Obama's health overhaul for not getting insurance, congressional analysts said Wednesday. Most would be in the middle class. The new estimate amounts to an inconvenient fact for the administration, a reminder of what critics see as broken promises.

The numbers from the nonpartisan Congressional Budget Office are 50 percent higher than a previous projection by the same office in 2010, shortly after the law passed. The earlier estimate found 4 million people would be affected in 2016, when the penalty is fully in effect.

And the budget office analysis found that nearly 80 percent of those who'll face the penalty would be making up to or less than five times the federal poverty level. Currently that would work out to $55,850 or less for an individual and $115,250 or less for a family of four. Read more >>

List of Obama's New Health Care Taxes

The health reform law changes the Medicare tax in two ways: It adds a surtax on wage income above a certain level, and it creates a new Medicare tax on investment income. Some high-income households will only be subject to one of those changes, and some will be subject to both.

Starting next year, high-income individuals will pay another 0.9 percentage points on their earned income over $200,000 ($250,000 if married). That's on top of the 1.45% they currently pay on all of their wages.

For those with investment income, they also could be subject to a new 3.8% tax on at least a portion of their capital gains and dividends. (Here's a fuller explanation of how the Medicare tax increases will work.) 

New mandate to buy insurance: Starting in 2014, individuals must be insured or pay a penalty.

The amount of the penalty rises annually from 2014 to 2016 and is adjusted for inflation thereafter.

In 2014, the penalty will be no more than $285 per family or 1% of income, whichever is greater. In 2015, the cap rises to $975 or 2% of income. And by 2016, the penalty would be up to $2,085 per family or 2.5% of income, whichever is greater.

The dollar amounts for a single adult would be $95, $325 and then $625 during that same time period.

However, the penalty couldn't exceed the national average premium of the lowest cost policy on the new health insurance exchanges.

Read the rest of the article