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Friday, August 14, 2009

IRS The New Health Care Enforcer

People often joke that government-run health care will have the efficiency of the motor vehicle department, and the compassion of the Internal Revenue Service. This joke will become reality if present Democratic health restructuring proposals are enacted.

Under both the House and Senate Health, Education, Labor and Pensions (HELP) Committee bills released to the public, the Internal Revenue Service will play a key role in monitoring and enforcing health care mandates against individual taxpayers. Yet the introduction of the IRS into the health care system has received scant attention.

The Senate bill imposes a new requirement that all persons who provide health care coverage to others must file a return with the IRS listing the names, addresses, social security numbers, and the coverage period for each person, and "such other information as the Secretary [of Health and Human Services] may prescribe." (Section 161(b) starting at page 107). The bill does not limit what information the Secretary 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). The following information must be reported by the person providing health coverage:
(A) the name, address, and TIN of the primary insured and the name of each other individual obtaining coverage under the policy, (B) the period for which each such individual was provided with the coverage referred to in subsection (a), and (C) such other information as the Secretary may require.
This information is to be provided to the IRS for good reason. 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
the Secretary shall seek to establish the minimum practicable amount that can accomplish the goal of enhancing participation in qualifying coverage (as so defined).
The reporting requirements can only be understood in this tax context. In order to know which taxpayers to tax, the IRS needs to know which taxpayers do not have coverage received from someone else (normally, an employer).

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.

These provisions should have people interested in privacy greatly concerned. While income information already is reported to the IRS, the IRS traditionally has not received personal health care information about individuals.

The IRS involved in health care monitoring and enforcement. Somehow, I doubt that most supporters of Democratic health care restructuring concepts will like this detail. But it's in there.

UPDATE: See my new post on why splitting the health care bill may not be a bad thing, Splitting The Bill Proves Our Point

Related Posts:
Taxing Your Mere Existence
Health Care Tax Insanity Chronicles, Part 3 (IRS To Decide Amount of Taxation)
Obama Was Against Compulsory Health Insurance, Before He Was For It
"Put Your Laws All Over My Body"

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  1. Ouch. I knew they would have their fingers in our bank accounts, but the IRS. Eeek!

  2. Um.... Mr X, it appears we made an error on your 2006 Tax return. Until you pay the specified delinquent amount (see below) plus interest and penalties(see below) I am afraid that all health services are barred to you . Additionally the surgery you recently underwent will now also need to be repaid as your service was discontinued at the time we determined that your taxes were incorrectly filed. This adds xxx$ to the total now due.

    If you feel this is in error please come to the local IRS office with your medical and financial records for a vouluntary co-operative audit session with one of our counselors.

  3. The IRS will also have the power to electronically deduct from our bank accounts fines, penalties and taxes for failing to get the approved coverage and possibly any number of other "misbehaviors" not approved by the Inquisitors. If this bill and the changes to IRS (and Social Security) code took place, I could envision parts of the population going right off the grid and underground. No wonder the Marxists fear an armed uprising - they are trying their d@mnedest to bring one about so they can use Stalinist smackdowns against us. Paranoid? Not when they're really after you. These megalomaniacal thugs are after us.

  4. Massachusetts has a similar IRS provision. You must buy health insurance if you live in Massachusetts or else you will be fined by the Mass Division of Revenue.

    But only if you are a Jew.

    If you are a Muslim, you don't have to buy health insurance. Muslims are exempted from having to pay the tax.

    Christians are also fined. When you fill out your income tax, you are asked whether you are a Jew (or a Christian). If you answer yes, then you are assessed a penalty if you do not have health insurance.

    But if you answer that you are a Muslim, you get a free pass.

  5. Yeah, I think Florida needs some back up for his comment.

  6. It's not the just the IRS.

    See Page 39, Line 16:

    It allows the Health Services Commissioner to "request from the Secretary of the Treasury the disclosure to the Commissioner of such information as may be permitted to verify the" individual's application for an affordability credit.

    So this whole new bureaucracy is going to have access to our IRS records as well.

  7. It's not just the IRS.

    See p. 139, line 16.

    The new Health Commissioner can request IRS records to verify qualification for the affordability credit.

    Isn't that comforting?!

  8. Mr. Jacobson,

    What I have written is the truth. If you wish to verify it, you can buy yourself a Massachusetts state copy of H&R Block TaxCut.

    Look at form: Schedule HC
    Look at line: 9a

    If you are a Muslim, you do not have to pay the tax. Muslims (and other religions that are not really present in Massachusetts such as Amish) were specifically exempted from the requirement to pay this health care tax when the law was passed in Massachusetts.

    Only Jews pay the fine. And Christians.

  9. Line 9a of Mass. Form HC says "RELIGIOUS EXEMPTION. Are you claiming an exemption from the requirement to purchase health insurance based on your sincerely held religious beliefs?" It does not distinguish among religions. So I don't know where you get the information that Muslims do not have to pay the tax; any religion could claim the exemption.

  10. Incredible.

    In response to the alleged problem of there being 40 million Americans without health insurance, power-lusting Obama's solution is to unleash the IRS on these "uninsured" to force them into buying "qualifying", i.e. "government-approved" health insurance.

    This is a brazen statement that we are rightless serfs at the mercy of the Feds -- that our lives and our property belong, not to US, but to "society", to be disposed of as society sees fit, to solve any of its alleged "problems" or fulfill any of its alleged "needs".

    It only remains to be seen whether enough of the original American spirit remains in tact to fight this push toward the slave-pen. Pray that it does.

  11. I especially liked the response that referred to the "alleged health care problem" because I for one haven't seen one yet nor, had I seen one prior to the campaign. Because some candidate declared there was one and then becomes president,magically it becomes one? Could all those popular and electoral votes have been wrong? Be careful what you wish/vote for.

  12. Mr. Jacobson,

    I got the information from the Massachusetts Department of Revenue. I called them at 800-392-6089.

    The state of Massachusetts only recognizes certain religions for the purposes of exempting from this tax, and it has ruled against several hundred people trying to claim this exemption based on their sincerely held religious beliefs.

    Muslims are ipso facto exempt.

    Jews are not. Christians are not.

  13. Personally, I think it's HIGH TIME they did something like this and stopped ILLEGALLY MEDDLING into the affairs of upstanding terrorists and their enablers and financiers.

  14. The first regulation of firearms occurred using Congress' power to levy taxes. Look into how deep ATF gets into a person's life if they want to qualify to pay the tax to own a full automatic machine gun. There is a model to follow.

  15. Wait, if I lose coverage at all, I'd pay 2.5% of my income for that year?

    So if I'm not covered for an hour, I could theoretically be charged 2.5% of my annual income for that?

  16. Florida, speaking as a Muslim I can see no reason why I would claim a religious exemption or why my religious beliefs would entitle me to such an exemption. Indeed, reading about it, it seems primarily geared towards the Amish who are exempted from contributing to most government programs including SS and Medicare taxes.

    Now, regarding the IRS involvement in determining whether or not a mandate applies and whether or not an individual is eligible for a government subsidy... SO WHAT? The IRS already has access to all this information as a result of your tax returns. It seems foolish to duplicate effort when the IRS can already perform this service.

    It's already been established that employers over a certain revenue cap will be required to provide coverage and will be provided with incentives to do so. Those individuals not subject to receving coverage from their employers will be required to purchase an individual plan of which one choice (of many) will be a public option. Given that there is a mandate for purchasing insurance, it only makes sense that there be a mechanism to enforce that mandate, namely a penalty. This penalty will only affect those who are capable of purchasing insurance but choose not to. These are the same people who currently don't have insurance and when they break a leg or have a heart attack and show up in the emergency room they end up not being able to pay and their costs are passed along to the rest of us.

    A mandate for health insurance is no different than a mandate for uninsured motorist coverage or paying into the Social Security and Medicare system.

  17. I challenge you and all the readers and comenters here to propose an alternative solution that doesn't involve the IRS.

    Accepting the bill as-is or rejecting it entirely is a false dichotomy.

  18. The true spirit of Limburger Dittoheads seeps into every health insurance discussion.

    May the Goddess deliver us from the spreaders of such falsehoods!!!

  19. I am a US citizen but have been living in another country for 5 years. I still pay US taxes (required), and am not planning to return to the US. I have insurance in the country in which I live. Why should I be penalized for not having US insurance which I will never use?

  20. @Nolanimrod. I'll take my risks with the "terrorists and their enablers and financiers" if it means that I can control my own life, thank you very much. I'd rather not trade my liberty for a little bit of (perceived) security. At any rate, haven't you noticed that laws like this only apply to the law-abiding?

  21. Don't believe the lies! Read the bill yourself or attend a public reading: http://www.urinalgum.com/?p=558

  22. @John : People in the US who are abroad are automatically considered insured for the purposes of this legislation, it's like a page after the quoted section.

    Also, @ me, the 2.5% is the maximum you can be charged, it's pro-rated for the time you're actually uninsured, so I'm no longer concerned about that.

  23. I would just quit my job if I was required to purchase "health insurance." I do not believe in the medical community. They are merely drug pushers for the pharmaceutical companies. I will not participate. Are there any free countries left on this earth?

  24. @urinal gum, @Randomarrow. I've read the bill.. it's not the COMPLETE and full-up bill, since it's a DRAFT. But here's a snippet that is both disturbing and telling of what "reform" means to these people. The "new" Insurance Czar (which is in the bill as it stands now, not simply proposed) will set price controls on private insurers. If that doesn't scare you, nothing will. The board will set "acceptable" charges and rates. For those with comprehension difficulties, that means PRICE CONTROLS. Not reforming what makes things cost so much... just cutting the ability to charge FMV rates. THAT is how the "public option" is going to screw private insurers and force us all on the government rolls.

    Suffice to say, I'm getting a little tired of the astroturfers claiming "read the bill!" when it's #1 not the final bill, and #2 there is no specific debunking of the issues raised. Even the comments by Obama regarding the "death camp" fiasco don't fully put that to rest, because quite simply he's speaking out of both sides of his mouth.

    I am too tired at the moment to go line by line with people who are blind to the facts, but if EVERYONE read the bill, there'd be FAR fewer supporters, that is for sure. If you want to see government run health care in action... go to a VA hospital, then tell me you want these idiots in charge of your health and life. If you still do, there's really no hope to actually discuss this issue rationally.

  25. I'll take that challenge. Check out David Goldhill's article in The Atlantic Monthly. He did a study of the health care industry after his father died 2 years ago and, IMHO, nailed some of the fundamental problems. He even comes up with a credible solution. It's not 100% perfect, but it's a damn sight better than any of the legislation working its way through congress:


    Oh, and Mr. Goldhill is a democrat, which surprised the heck out of me in light of the fact that he thinks the currently proposed bills are a big mistake.

    It's a long read, and I didn't expect to read it all myself, but it's very well written and extremely absorbing. Very worth it.


  26. This is a very dangerous period because Nationalization will still occur even without an overt government run insurance plan like this "public option" provision everyone keeps fixating on - everything else contained in the plan is just as dangerous and is not being discussed in any kind of a targeted manner.

    Here are the core elements what will be contained in the “health care reform compromise” after the so-called “public option” is in all likelihood dropped; both the Bacus and Wyden-Bennett bill contain all of these items:

    (a) Federal Regulation aka HEALTH CZAR/DEATH PANELS/RATIONING
    (b) Employer/Individual Mandates aka NATIONAL HEALTH INSURANCE
    (c) Government Subsidies aka MIDDLE CLASS MEDICAL WELFARE

    With the Federal Government setting the rules, forcing everyone to participate, and is paying the bills for most of the middle class through subsidies how is this anything other than Nationalization?

    And it’s clearly a government take-over of health care – only the names are changed to make us feel better about the arrangement. Since the government will be controlling the market and setting the terms, health insurance companies will essentially quasi-governmental agencies that get to administer the plan. They will be controlled in the same manner as GM or CITIGROUP and will be private in name only.

    The common thread in all of the so-called "compromise" or bi-partisan plans is the Individual Mandate to force people to buy government dictated health insurance. This needs to be the focus for conservatives now!

    I would strongly advocate to conservatives in the Media/GOP elected officials that they stress three very simple messages:

    (1) The Individual Mandates need to be opposed and need to be the center piece of the opposition message - they are the most political unpopular feature of the Obamacare plan and they hold the whole scheme. Simply put, there is no government takeover without Mandates.

    (2) Health Insurance Companies need to be called out for receiving Bailout money and a Monopoly Market. Health Insurance execs are politically unpopular and this would put the GOP/Opponents on the side of the people and not the special interests. We conservatives have a responsibility to defend the concept of insurance and free markets but not the current government and special interest distorted market.

    (3) Obamacare is a corrupt bargain that benefits big government, powerful Washington politicians, big union, and big companies/industry at the expense (once again) of the taxpayer, small business, the elderly, and the young.

    Particularly, Republican leaders in the U.S. Senate need to understand this as many of the “compromise” plans being discussed contain all of these elements. They need to be forced to go on record as not only opposing the “government option” but these Employer/Individual Mandates too before they fall into the trap of thinking they are acceptable and not government run health care.
    Individual Mandates to buy private insurance sound like a “free market” solution and “individual responsibility” but in this context they are not – they are simply a front for a government run system. Again, the common thread in every liberal/statist health care bill is the Individual Mandate. To see it in action, look no further then how these Mandates in MA work to give government full control and to skyrocket costs. Many conservatives can be easily fooled by this faux “private” front (Mitt Romney was) – there needs to be united conservative opposition to Mandates now!

  27. Who is better than the IRS to track you and over see Obama Government run health care as our Corrupt Congress gave it even more power to steal from us and to hire 17,000 more IRS enforcement agents.
    What a sad day for America and Freedom.

  28. I know this comment arrives very, very late, but more people are starting to realize the truth of this post now that Obamacare is law.


    What this non-lawyer wonders is this: If Roe v. Wade (and Griswold before it) found a constitutional right to privacy that protects abortion, does that same right protect citizens from having the IRS force disclosure of every penny they earn and spend?

    If so, as a practical matter, how would citizens bring the issue to a court for resolution?

    Just wondering.