Who Are the 6 Million Americans Paying the Individual Mandate Tax?

An early read on the population incurring the landmark penalty rather than purchasing health insurance

When the most controversial component of President Obama's health reform law kicks in a few years from now, 6 million of the 30 million Americans who remain uninsured at that point will be subject to a tax penalty. That's up from the 4 million the Congressional Budget Office (CBO) originally said would be liable.

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The penalty is meant to do two things: encourage Americans to buy health insurance and raise revenue for the government. But it won't affect everyone in the same way. Here's everything we know about who'll be affected so far.

There are two ways to look at the individual mandate penalty. The first is to talk about the positive definitions in the law; the second is to talk about who's exempt.

Who pays?

Let's start with the former. There are three pillars to the tax. In order to incur it, you have to be a federal taxpayer. You have to be able to afford health insurance. And you also have to make the decision not to buy it. Here's how those people break down in terms of income, according to the CBO, relative to the federal poverty level:

individual-mandate-chart-2-615.png
The CBO projects that in 2016 the poverty level will be $12,000 for a single person and $24,600 for a family of four.

Who doesn't pay?

On their own, those three pillars exempt a large share of Americans from the tax. They cut out all the undocumented Americans who don't pay taxes. They exclude those who don't have enough income to need to file a tax return. They ignore people who can't get health insurance at a reasonable cost -- defined as 8 percent of household income.

Then there are the explicit exemptions contained in the law, loopholes designed for specific constituencies. Tim Jost, a law professor at Washington and Lee University, has a whole checklist.

"It doesn't cover people who have religious objections," Jost told me in a phone interview. "It doesn't cover people in healthcare sharing ministries; people who are incarcerated; people who have been uninsured for fewer than 3 months; people who are expatriates; people who are Native American. There are a lot of people it doesn't cover."

Even after you exclude all of these exempted groups, though, you're still not down to the core 6 million the CBO says will ultimately wind up stuck with the tax. To get there, we need to consider one last group who'll be granted a free pass.

The Medicaid exemption exception

Notes_mandate_final2-615.png The income levels that are grayed out won't be subject to the individual mandate penalty.

We already know that if you don't have health insurance, you're subject to the tax. If you're on Medicaid, you're safe from the penalty, as Medicaid is a form of insurance. But there's another catch on top of that. Some states have vowed not to expand Medicaid coverage as the original health reform law intended -- a challenge to Washington that was upheld by the Supreme Court this summer. In those states, people who might have qualified for this expanded coverage now won't receive it, leaving them at risk of being uninsured. Specifically, this includes anyone who lives below 138 percent of the poverty line. Rather than fine them for a decision that wasn't in their control, the Department of Health and Human Services will rely on what's called the "hardship" exemption to waive the penalty. It's an expansive clause, so the government will be free to exempt even more people under this part of the law if it sees fit.

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Brian Fung is the technology writer at National Journal. He was previously an associate editor at The Atlantic and has written for Foreign Policy and The Washington Post.

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