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Obamacare and the IRS

irs1Little Rock  One of the things that is interesting in learning about the Affordable Care Act or Obamacare is how much of the interface for the American public is not going to be the kind and gentle hands of the Health and Human Services (HHS) Department under whose auspices the program will be run, but direct dealings with the paymaster, the Internal Revenue Service (IRS).  I’m not sure that folks have really come to grips with the complicated settling up process on their health plans on both the front end and the back end that will deal with the Service, as they call themselves.

            I’m not saying that they are not the right folks to handle the dollars at collection time, but ignoring the current so-called scandal at the IRS, which seems mostly rightwing whining for tax breaks, the IRS is hardly Mr. Warm and Friendly, and they are decidedly not used to being transparent nor are they good communicators, as everyone finds out on an annual basis.  Let’s face it; most of us pay our taxes on a wing and prayer.  No matter what we fill out in the paperwork, we are shocked and delighted when there is a refund of any amount, regardless of whether it is even in the ballpark of whatever we had written down on our paperwork.  The whole experience for most Americans with the IRS and tax filings is somewhere between a mystery and a miracle.  Sometimes there is relief, but there are never bright, sunny days in that sky.

            Now the IRS is part of the fact checker on the front end of the Obamacare process, since in a number of categories they determine whether or not someone is eligible for a hardship or other kind of exemption from having to sign-up for insurance one way or another.  A lot of this is because they have the biggest database in town, or it seemed that way until we came to grips with the NSA.  So they decide not only if you are too poor to file, which also means too poor to pay for insurance, but also whether or not you are incarcerated, the member of a recognized tribe, and a list of other exemptions. 

            On the back end they settle up if you were given too many premium tax credits in payments to your insurance company or help in cost sharing on deductibles and copayments.   If your wages or family income goes up, then you will pay back the government at tax time via the IRS.  And, more importantly, if you did NOT sign up at all, it will be the IRS that computes your fines for 2014 at 1% of gross income or $95 whichever is higher, and then 2% in 2015 and 2.5% of gross annual income in 2016, about $400 and $700 respectively.  This is the IRS remember, so when they take it, there won’t be anything friendly in the transaction.   I’m betting there won’t be a paragraph from them that says here’s your fine, pay up, and you still saved X amount if you had paid for health coverage, you bum!   No, it will be another form letter changing your refund to nothing if you were hoping for something or sending you a bill for more money.  Politically, without a lot of work, there’s going to be huge political backwash around the 2016 election, though shrewdly most of the reverberations won’t come until mid-2017 on the tax settlements for the 2016 filings.

            To make the ACA work, we’re going to need a huge cultural shift in the IRS.  It may be easier to deliver healthcare to all Americans, than to make that happen.