Tuesday, November 10, 2009

Pelosi: Jail Time for Those Who Do Not Comply

Americans could face some major consequences for failing to maintain health insurance under the Pelosi health care bill, which was passed in Congress Saturday night.

Dave Camp (R-MI), a ranking member of the House Ways and Means Committee, has released a letter from the non-partisan Joint Committee on Taxation (JCT), outlining these consequences. Under Pelosi’s bill, failure to comply with maintaining “acceptable health insurance coverage” for individuals (or for both spouses, in the case of households with joint returns), as well as each dependent child, would result in an additional mandate tax (generally 2.5% of income). If any American decides not to maintain such insurance, and chooses not to pay the mandated tax liability, he or she will be subject to significant civil and criminal penalties.

The bill specifically states that if the federal courts find an individual has failed to maintain insurance coverage deemed acceptable by the government, and willfully refused to pay the resultant mandated tax liability, the following criminal penalties could apply:

* Section 7203 of the bill states that “misdemeanor willful failure to pay is punishable by a fine of up to $25,000 and/or imprisonment of up to one year.”

* Section 7201 of the bill states that “felony willful evasion is punishable by a fine of up to $250,000 and/or imprisonment of up to five years.”

The Congressional Budget Office (CBO) has stated that the least expensive family non-group plan would cost $15,000 in the year 2016, a monthly premium of $1,250. This means, for example, that in the case of a household whose income is $30,000 per year, and whose employer does not offer health insurance, failure to purchase the $15,000 policy would result in a mandated additional household tax of $7,500. Failure to pay this tax would result in large fines and/or prison time.

Now that this bill has passed in a narrow margin through Congress, it is up for consideration by the Senate. According to Camp, the Senate Finance Committee has worked on a bipartisan bill which considers the same mandate tax, but shields Americans who are unable to afford the $15,000 premium from the penalty of incarceration and civil liabilities. He states that Speaker Pelosi has specifically maintained the jail time provision within the language of her bill. Camp also states that there are viable alternatives to this bill, which will lower the cost of health insurance without cutting Medicare.

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