ACA Tax Penalties Decreased in 2015

Fewer Americans paid penalties for lacking health insurance in 2015 than 2014, according to a letter from IRS Commissioner John A Koskinen.

Under the Affordable Care Act (ACA), individuals are required by mandate to have health insurance or pay a penalty. As the letter states, “Individuals must have qualifying health insurance coverage for each month of the year, to  have an exemption  from the requirement to have coverage or to make an individual shared responsibility payment.” 

The IRS tax penalties, known as individual shared responsibility payments, were paid by 6.5 million tax payers in 2015, compared to the approximately 8 million who paid penalties in 2015. Mr Koskinen noted that the vast majority (77%) of taxpayers still reported a refund in 2015. According to the letter, individual shared responsibility payments totaled $3 billion in 2015.

This number is 20% lower than the approximately 8 million taxpayers who reported payments for the 2014 tax year. In total, the IRS collected $3 billion in penalties from those without coverage in 2016. 

“The figures… show that compliance has improved considerably relative to tax year 2014,” Mr Koskinen said. “For example, about 80% of taxpayers who received advance payments of the premium tax credit for 2015 have reconciled, and about 80% of the approximately $25 billion in advance payments of the premium tax credit that was paid has been reported. At the same time last year, these figures were about 70% for tax year 2014.” 

According to the letter, the average payment per-penalty was approximated $470

Mr Koskinen noted in the letter that this data is preliminary and subject to change. —Chris Evangelista