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On the PP-ACA
By Children’s Home Society of Florida Foundation
In 2010 Congress passed the Patient Protection and Affordable Care Act (PPACA). A key part of the Act is an individual mandate for health insurance. All individuals must have health insurance by 2014 or pay a tax-penalty.
The Tax Penalty
The tax-penalty starts at the greater of $285 per family or 1% of income in 2014. However, by 2016, the tax-penalty increases to $2,085 per family or 2.5% of income, whichever is larger.
Commerce Clause
Many states sued the federal government and asked that the individual mandate be held invalid. While the various courts had different positions on the issue, some federal judges were concerned that requiring a person to purchase insurance could be a violation of the Commerce Clause of the U.S. Constitution.
CJSC John Roberts
Chief Justice of the Supreme Court John Roberts wrote the opinion for a 5-4 majority in the PPACA case. First, he determined whether or not the Court was prohibited from ruling on the case under the Anti-Injunction Act. He decided that the required payment would be a “penalty” for purposes of that Act and not a tax. Therefore, the Supreme Court could issue a ruling.
Second, Chief Justice Roberts reviewed the powers of government under the Commerce Clause. He agreed with the other four justices opposing PPACA that Congress had the right to regulate commerce, but does not have the right to regulate non-activity. Therefore, requiring individuals to purchase health insurance is not a permitted power under that provision. PPACA could not be approved under the Commerce Clause.
However, Roberts observed that it is permissible for the Court to consider the validity of PPACA under the power of the government to tax. He determined that the individual mandate to purchase insurance or pay a penalty-tax is permitted under that power. Roberts stated, “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” He carefully approved the use of the power without discussing the appropriateness of PPACA provisions.
Roberts found several reasons for permitting the taxing power. The tax-penalty will be paid when filing IRS Form 1040. As is true with other tax provisions, lower-income individuals are excluded from this tax-penalty. The tax-penalty is part of the Internal Revenue Code and will be collected by the IRS.
Dissenters
The four dissenting Justices would have determined that PPACA fails to meet the requirements of the Commerce Clause and would have invalidated the entire bill.
Editor’s Note: The taxes to pay for PPACA include a new tax on medical devices that will increase costs to individuals and healthcare providers. There also is a new 3.8% Medicare tax. It applies in 2013 to income and capital gains. If the expected post-election tax bill extends the current 15% capital gain rate, then the capital gains tax rate will be 18.8% in 2013. However, if the 15% federal capital gains tax rate is increased to 20%, then the new rate in January of 2013 will be 23.8%. The increase in capital gains rate may influence charitable gifts of appreciated property in 2013.
Conclusion
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Filed under: Breaking News, Health Insurance, Health Law & Policy, Taxation | Tagged: ACA, Children's Home Society of Florida Foundation, Commerce Clause, John Roberts, Obama care, Patient Protection and Affordable Care Act, PP-ACA, SCOTOS, Supreme Court Permits Healthcare Taxation |
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Inside the Health Care Decision
[What Issues Can Financial-Advisors Focus On?]
The Supreme Court decision looks and feels monumental to most Americans, even if it just confirmed the status quo, and clients will want to know its likely impact on their budgets, their retirement planning, and the economy.
http://www.financial-planning.com/blogs/supreme-court-health-care-decision-2679664-1.html?ET=financialplanning:e8792:2248552a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=FP_Daily__070212
Chase
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Chase,
Generally speaking, if you owe the IRS, it will get the money from you—with the possible exception of the ObamaCare tax.
Though ObamaCare’s individual mandate imposes a tax on people who do not purchase government-approved health insurance, the law explicitly neuters the IRS’s ability to collect the tax.
Any thoughts.
Robert
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