A $10,000 Obamacare Penalty? Uncertain.

“As a result of our household couldn’t afford medical insurance, Obama/Biden penalized us about $10,000, then took that $10,000 and used it to pay for others’ free Obamacare. Trump ended that theft.”

In a Fb publish, Oct. 20, 2020

A viral Fb publish claims that former President Barack Obama’s medical insurance regulation penalized a household a big sum of money for not shopping for medical insurance and that President Donald Trump was chargeable for stopping the follow.

The publish options writing on the again of a automobile windshield that claims, “As a result of our household couldn’t afford medical insurance, Obama/Biden penalized us about $10,000, then took that $10,000 and used it to pay for others’ free Obamacare. Trump ended that theft.”

The publish was flagged as a part of Fb’s efforts to fight false information and misinformation on its Information Feed. (Learn extra about  PolitiFact’s partnership with Fb.) We discovered an identical publish on Instagram.

The publish seems to confer with the person mandate penalty, a tax underneath the Reasonably priced Care Act positioned on those that selected to not get medical insurance. On the finish of 2017, Republican-backed tax laws, additionally supported by Trump, zeroed out the high-quality. Starting in 2019, individuals may not be penalized for not having medical insurance. Thus, the mandate hasn’t been in impact for about two years.

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However $10,000 — the hefty quantity this household was supposedly penalized for not having medical insurance — raised questions for us. And was that cash actually used to pay for different individuals’s medical insurance? We determined to look into it.

The Historical past of the Particular person Mandate

The ACA was applied in 2010 in the course of the Obama administration. The intention of the well being care regulation — sometimes called Obamacare — was to make sure everybody had medical insurance.

To that finish, the regulation used what well being coverage consultants name a “carrot-and-stick” strategy. For low-income and middle-income people who had problem affording medical insurance, the federal government would offer tax subsidies to cut back the price of insurance coverage — that was the carrot. And to verify everybody enrolled in a medical insurance plan, those that didn’t enroll have been fined, underneath what was often known as the person mandate provision. That was the stick.

The person mandate, which didn’t kick in till 2014, was unpopular with the American public, in keeping with polling on the time. A 2017 KFF ballot confirmed that 55% of People supported the thought of eliminating the requirement that everybody will need to have medical insurance or pay a high-quality. (KHN is an editorially impartial program of KFF.)

Though certainly one of Trump’s key marketing campaign guarantees was to repeal and change the ACA, efforts to take action failed in 2017 when the Republican-held Senate did not get the votes it wanted.

As a substitute, of their 2017 tax invoice, Republicans set the penalty for the person mandate to $0. Beginning in 2019, People not needed to pay a high-quality for not having medical insurance. Trump signed the 2017 tax invoice into regulation. So, it’s true that Trump and congressional Republicans have been chargeable for neutralizing the penalty.

Nonetheless, consultants identified that the person mandate remains to be in place, it’s simply that the penalty is about to $0. Actually, the tip of the penalty is behind the justification for a courtroom case making an attempt to overturn the ACA, introduced by Republican attorneys common and supported by the Trump administration. The plaintiffs argue that the well being care regulation is not constitutional as a result of the penalty not “produces no less than some income” for the federal authorities. The Supreme Courtroom will hear oral arguments on the case Nov. 10.

The Math

The viral social media posts declare that the household “couldn’t afford medical insurance” and was penalized $10,000.

Well being coverage consultants informed us that whereas the social media publish doesn’t give all of the specifics wanted to know if this was completely true, it appears unlikely a penalty can be this excessive.

One challenge is the publish doesn’t specify whether or not the $10,000 penalty was incurred in a single yr or over a number of years. It additionally doesn’t say what number of people have been a part of the household.

Assuming the $10,000 penalty was incurred in a single yr, a number of consultants informed us that the household would have had an annual earnings above $400,000 and no less than one individual would have needed to be uninsured for the whole yr. That math is predicated on the penalty construction in place in 2018, the final yr the mandate was enforced.

In 2018, the penalty was calculated certainly one of two methods. The high-quality was the larger of the 2 outcomes:

• $695 for an grownup and $347.50 for a kid, as much as a max of $2,085 per household yearly, or
• 2.5% of household earnings above a sure tax submitting threshold (KFF estimated the tax submitting threshold was $10,650 for a single particular person or $21,300 for joint filers in 2018).

The primary solution to calculate the penalty clearly doesn’t apply for the reason that max was $2,085 per yr. So, the second can be the one solution to get a $10,000-a-year penalty. To reach at such a quantity, you would need to take 2.5% of the household’s earnings. On this case, 2.5% of a $400,000 earnings will get you near $10,000.

And consultants mentioned it’s extremely unlikely {that a} household with a $400,000 earnings would have had problem affording medical insurance.

“So I’d extremely doubt the veracity of what’s written on that automobile windshield,”Karen Pollitz, a senior fellow in well being reform and personal insurance coverage at KFF wrote in an electronic mail. “Individuals with that a lot earnings virtually at all times have job-based well being advantages and, if not, usually are inclined to insure themselves very nicely as a way to shield belongings — in any other case, if hospitalized and uninsured, they may owe many multiples of the penalty quantity in medical payments.”

Jonathan Oberlander, a well being coverage professor on the College of North Carolina-Chapel Hill, additionally identified {that a} $10,000 penalty would have been uncommon.

“Only a few American households would have paid something near that quantity in penalty for not having insurance coverage — the typical penalty per individual in 2017 was round $700,” Oberlander wrote in an electronic mail. “Furthermore, solely a small proportion of People ever paid the penalty for not having medical insurance — in 2017, 4.6 million individuals,” or about 1% of the inhabitants. (In 2017, 325 million individuals lived within the U.S., in keeping with the Census Bureau.)

It’s additionally unclear whether or not it could have simply been cheaper for the household to pay for medical insurance fairly than incur a $10,000 penalty, mentioned Matthew Fiedler, a well being coverage scholar on the Brookings Establishment.

“It will depend on the ages of the family members, the place they dwell, what yr (or years) we’re speaking about, and the household’s earnings,” Fiedler wrote in an electronic mail. “There are conceivable situations the place the household may have discovered a bronze plan for $10k or much less. However there are additionally loads of believable situations the place they may not have. With out figuring out extra concerning the household’s circumstances, it’s simply laborious to say with any confidence.”

The place Did the Penalty Cash Go?

Consultants additionally informed us that the publish’s assertion that the penalties paid for not having medical insurance have been immediately utilized to fund different individuals’s medical insurance was off the mark.

The person mandate penalties have been assessed throughout every annual tax submitting, after which funds have been made the yr after there was a lapse in insurance coverage protection.

These penalties have been collected identical to every other tax cost.

“As a strict accounting, remember, every thing will get dumped into the Treasury whatever the supply, after which it’s appropriated out of the Treasury by Congress,” mentioned Edmund Haislmaier, a senior analysis fellow in well being care coverage on the Heritage Basis. “It’s not like cash goes into one account after which one other.”

So, whereas it’s actually doable that the penalty cash may have been used to assist pay for a number of the ACA subsidies for different individuals, the cash additionally may have gone to every other variety of issues the federal government pays for, just like the navy, catastrophe aid or schooling.

“You don’t know precisely the place your taxes or penalties go,” mentioned Evan Saltzman, an assistant professor in economics at Emory College. “Possibly a small share went to Obamacare, however that’s a stretch. You’ll be able to’t monitor the place each greenback you spent in your taxes goes.”

It’s additionally deceptive to say that different people acquired “free Obamacare” from the penalty cost. The consultants mentioned that whereas Medicaid growth, which was part of the ACA, does present well being care protection for low-income people who find themselves eligible, those that purchased insurance coverage on {the marketplace} would nonetheless doubtless have paid for some a part of their protection after subsidies have been utilized.

Our Ruling

A viral social media publish claims {that a} household was penalized $10,000 for not with the ability to afford medical insurance. It additionally claimed the penalty cash was taken to pay for others’ “free ObamaCare” and Trump stopped that follow.

It’s true that Trump and Congress did zero out the person mandate requirement, so individuals may not be penalized for not having medical insurance. However after that, skepticism abounds.

As an illustration, it’s most unlikely {that a} household would face a $10,000 penalty in a single yr. Furthermore, if such a household did face this penalty for not having medical insurance, they might doubtless be in a high-income bracket for which medical insurance tends to return from an employer or be reasonably priced. And the cost that the penalty was used to offer “free protection” for others doesn’t match with federal accounting processes.

Consultants mentioned, although, that the shortage of specifics about this household’s state of affairs makes it tough to be utterly definitive.

We charge this declare Principally False.

SOURCES

Census Bureau, QuickFacts United States,  accessed Oct. 27, 2020

The Commonwealth Fund, “The Impact of Eliminating the Particular person Mandate Penalty and the Function of Behavioral Elements,” July 11, 2018

E-mail interview with Christine Eibner, the Paul O’Neill Alcoa chair in coverage evaluation at Rand Corp., Oct. 23, 2020

E-mail interview with Jonathan Oberlander, professor of well being coverage and administration on the College of North Carolina-Chapel Hill, Oct. 25, 2020

E-mail interview with Karen Pollitz, senior fellow in well being reform and personal insurance coverage at KFF, Oct. 26-27, 2020

E-mail interview with Matthew Fiedler, fellow with the USC Brookings-Schaeffer Initiative for Well being Coverage on the Brookings Establishment, Oct. 26, 2020

fifth Circuit Courtroom of Appeals’ technical revisions of opinion, accessed Oct. 27, 2020

H.R.1 — one hundred and fifteenth Congress (2017-18), accessed Oct. 27, 2020

IRS.gov, “Particular person Shared Duty Provision — Reporting and Calculating the Fee,” accessed Oct. 27, 2020

KFF, “Explaining California v. Texas: A Information to the Case Difficult the ACA,” Sept. 1, 2020

KFF, Particular person Mandate Penalty Calculator, Nov. 17, 2017

KFF, “Kaiser Well being Monitoring Ballot — November 2017: The Function of Well being Care within the Republican Tax Plan,” Nov. 15, 2017

LeadStories.com, “Reality Test: Trump, Congress DID Finish Tax Penalty for Non-Insured, however $10,000 Penalty NOT Doubtless,” Oct. 22, 2020

Telephone interview with Edmund Haislmaier, Preston A. Wells Jr. senior analysis fellow on the Heritage Basis, Oct. 23, 2020

Telephone interview with Evan Saltzman, assistant professor in economics at Emory College, Oct. 23, 2020

PolitiFact, Repeal Obamacare Trump-O-Meter, July 15, 2020

Rand Corp., “How Does the ACA Particular person Mandate Have an effect on Enrollment and Premiums within the Particular person Insurance coverage Market?” revealed in 2015

This story was produced by Kaiser Well being Information, an editorially impartial program of the Kaiser Household Basis.