Affordable Care Act: How will the Individual Mandate be enforced in practice?

OK, this question is not about the constitutionality of Obamacare.

It seems that one of the major points of the Patient Protection and Affordable Care Act is that people who don’t have insurance and don’t qualify for an excemption from the mandate will be required to pay a “tax”, which effectively is a penalty for not having insurance.

Is there anything out there indicating how this will be processed in practical sense? Will there be a new section on IRS 1040 forms that says something like:

  1. Do you have health insurance?
  2. If yes, please attach evidence to your return.
  3. If you do not have insurance and do not fall under any of the above excemption criteria, add the following amount to your tax…


Or will it be behind people’s backs and insurance companies will report to the government and the government will send bills out to everyone who they deem to not have sufficient insurance and not be exempted?

What about disputes over whether or not a specific policy fulfills the requirements of the mandate? For example, if a person has a health insurance policy, but the Government thinks the policy includes too many exclusions to really qualify as true health insurance, will there be an adjudication process?

If the situation here in Massachusetts is any guide, there’ll be an extra schedule associated with your tax return. Here’s the form you have to fill out as proof of coverage in MA (PDF) and the instructions for same (also PDF).

When I filled out my MA taxes this spring (first time I had to do so), I didn’t have to attach any other proof of coverage. I’m not sure how the state checks the veracity of the claims made on the form, though.

You got a 1099-HC form from the insurer, which had all of the necessary information. “Big Insurance Company certifies that MikeS had plan number XXXX, with qualifying coverage on these dates.” They also sent the information to the tax collectors in MA. Pretty much just like a W-2 or any other major tax document.

Note the “Federal Identification Number” for the insurance company, and “Subscriber Number” for the plans. And… you apparently get a 1099-HC for for Massachusets.
Similarly, I assume the insurance company will send the IRS a computer file of SSN, start/end date and subscriber no for all insured clients. This suggests that even for a state program, the health insurance companies already have fed registration numbers. I bet you have to tell teh insurance company your SSN.

It’s pretty elementary to run a match, no different than running a match for unreported income using the employer’s income reporting forms.

At the very least, I’m sure the US Postal Service is happy about another federal form mailed to everyone by their insurance companies.

Ah, yes, I forgot about the 1099-HC — I really shouldn’t have forgotten this, since I had to bug my provider to send me one.

To my knowledge, the IRS has not finalized the forms or procedures it will use. Congress has tasked it to enforce the law, but it has a pretty broad authority to determine the exact manner in which it will do so. Since Congress has not approved funding for the additional employees the IRS believe it will need, they’ll look for something that will shift the burden of providing evidence to the insurers and the taxpayers.

My guess is that this will take the form of a 1099 or 1098 series form that insurers must provide, and that there will be a form/schedule to attach to the 1040 for special situations.

I’m able to get almost all my tax forms electronically now. HR handles the payroll stuff, and my banks and brokerages handle all the 1098s and 1099s for the mortgage, interest and dividends. I think there’s only one (the 1098 from my co-op) that I have to actually check the mailbox for.

And of course I e-file the 1040.