Exemptions Reduce Estimate of Americans Paying Obamacare Penalties

By Alex Wayne | June 5, 2014

Four million people are projected to pay the U.S. penalty for not carrying health insurance next year, about one-third less than previously estimated, after the Obama administration created exemptions from the fine.

The Patient Protection and Affordable Care Act requires most Americans to carry insurance starting this year, or pay a tax of as much as 1 percent of income. The Congressional Budget Office lowered its estimate of the number of people who will pay that fine in a report released today, saying the government will take in $3 billion less than expected from the payments.

The requirement to carry insurance is the heart of the law, known as Obamacare, part of a deal struck with U.S. insurers to guarantee coverage to anyone regardless of their health. Late last year, the Obama administration carved out a series of “hardship” exemptions from the requirement, such as home foreclosure, bankruptcy or a death in the family.

“Among the uninsured people subject to the penalty, many are expected to voluntarily report on their tax returns that they are uninsured and to pay the amount owed,” the budget office said in its report. “However, other people will try to avoid payments.”

The office said it lowered its estimate of the number who will pay the penalty by 2 million because it expects more Americans to be exempt after the administration’s rules for hardship exceptions and “changes in the economic outlook.”

About 79 percent of Americans are covered by health insurance from their employers or a government program such as Medicare, according to the Kaiser Family Foundation of Menlo Park, California.

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