A great majority of conservatives — especially those in positions of leadership or with access to the airwaves — are outraged about Obamacare. They are concerned that the reform will drive up healthcare costs, increase insurance premiums, hurt the quality of healthcare, increase taxes, and blow up the deficit. But in the wake of the Tea Party-targeting scandal, the Internal Revenue Service’s role in implementing the Affordable Care Act’s key provision — the health insurance exchanges — has also been put under close examination, bringing concerns regarding tax hikes back into focus.
“Obamacare taxes most people with health insurance, and most people without health insurance. Likewise, the law taxes many employers who provide health insurance, and most employers who don’t provide health insurance,” wrote Jim DeMint, the president of the Heritage Foundation.
As this statement makes abundantly clear, the most significant way the IRS will be involved in the implementation of Obamacare is with taxes. According to the non-partisan Congressional Budget Office, the bill will raise $1 trillion in revenues from 2013 to 2022 thanks to no fewer than 18 tax increases on which it is dependent. A more concerning factor for its detractors is that the majority of these tax hikes will be borne by the middle class, a move that directly contradicts President Obama’s 2008 “firm pledge” to those earning less than $250,000 that he would not “raise any of your taxes.”
In a recent report, the Treasury Inspector General for Tax Administration noted that “tax provisions included in the Affordable Care Act represent the largest set of tax law changes the IRS has had to implement in more than 20 years.” In total, more than 40 of the 500 provisions of the Affordable Care Act amend or add items to the tax code, according to the report. The Budget office has calculated that Obamacare will cost American taxpayers approximately $836.3 billion from 2014 through 2022.
Aside from the Department of Health and Human Services, the IRS is the most important government agency responsible for the implementation of the Affordable Care Act — it is charged with overseeing the law’s required purchase of health coverage as it will check whether millions of Americans are in compliance. It will also track individuals’ private health information in order to distribute tax credits to eligible individuals who purchase coverage under a qualified health plan through one of the exchanges. In total, there are 47 different Obamacare provisions that require involvement from the IRS.
More specifically, the Affordable Care Act requires that employers tell the IRS which of its workers have insurance, and companies with at least 50 full-time employees must indicate whether they offer “minimum essential coverage” under ACA standards. At the end of the year, insurers must provide the tax agency and policyholders a form verifying coverage status, and individuals must include those forms with their federal tax return. The IRS must also determine who is eligible for federal subsidies — which will help millions of people pay for insurance — and who qualifies for Medicaid. Finally, the IRS must asses who owes a penalty for individuals not purchasing insurance or required companies not providing coverage.
Since the IRS has such a predominant role in the law’s implementation, the tax agency has a key role in ensuring that Obamacare will not be a “train wreck” as some have contended it could be.
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