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Health Care Law’s Tax Penalty Threat Deemed Unconstitutional

August 25th

As of this Friday, Americans without health insurance may not have to fear tax penalties. Last week, the United States Court of Appeals for the 11th Circuit in Atlanta ruled that a provision in President Obama’s health care law requiring Americans to purchase health insurance or face tax penalties was unconstitutional.

This was not the first incidence in which the provision had been found unconstitutional, but a federal appeals court upheld the same law last year.


Many lawyers believe that this most recent decision will only increase the chances that the Supreme Court will decide the bill’s ultimate fate.

The court found that when they mandated people buy health insurance, a provision known as the “individual mandate,” Congress exceeded its powers. They held that while this particular provision was unconstitutional, the rest of the law could stand. However, a Florida judge ruled that the language of the law was such that one unconstitutional provision rendered the entire health care plan moot.

The Affordable Care Act

This law, known as the Affordable Care Act, is intended to insure 32 million Americans by mandating that most people obtain health insurance, subsidizing policies for the poor and requiring insurers to accept people with pre-existing health problems. Most notably the bill includes a provision that would inflict penalties on the tax bills of any who refuse health insurance.

This provision has been controversial since it was first proposed in 2009. Under the health care bill as it currently stands, an adult who does not have insurance by 2014 would be penalized $95 or 1 percent of their income, whichever is greater, so long as the amount does not exceed the cost of a basic health plan. However, by 2016 the penalty is supposed to increase to $695 for an uninsured adult, and up to $2,085 per household, or 2.5 percent of income, whichever is greater.

A person would only be penalized if he or she went three or more months of the year without health insurance. Also, some people are exempt from the law. If a person’s income is below a certain level, or if the cheapest available insurance would cost 8 percent or more of the person’s income, no penalty would apply for lack of health care coverage.


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