IRS DATA: Obamacare Penalty Hits Low & Middle Income Mainers Hardest

When the individual mandate in the Affordable Care Act (also known as Obamacare) that requires individuals to purchase health insurance or pay a penalty was challenged in the United States Supreme Court by the NFIB, it was upheld as a Constitutional exercise of the taxation powers of Congress.

In Maine, more than 34,000 households paid the IRS penalty (which the Supreme Court ruled a tax) in 2015 for not purchasing qualifying insurance.

According to IRS data, more than two-thirds of filers who pay the penalty nationally earn below 400% of federal poverty. The repeal of the individual mandate stands as a party line sticking point in in the United States Senate tax reform bill, with Democrats arguing that the mandate must stay in place, while Republicans propose repealing the mandate.



As the debate continues here are some important statistics from the IRS on who actually paid this tax, known as the Health Care Individual Responsibility Payment:

Households paying the individual mandate tax in 2015:

  • 10 households with an adjusted gross income under $1
  • 90 households with an adjusted gross income from $1 to $10,000
  • 11,940 households with an adjusted gross income from $10,000 to $25,000
  • 14,960 households with an adjusted gross income from $25,000 to $50,000
  • 4,490 households with an adjusted gross income from $50,000 to $75,000
  • 1,460 households with an adjusted gross income from $75,000 to $100,000
  • 910 households with an adjusted gross income from $100,000 to $200,000
  • 150 households with an adjusted gross income from $200,000 to $500,000
  • About 20 households with an adjusted gross income between $500,000 to $1,000,000
  • Undisclosed households with an adjusted gross income above $1,000,000 but so small a number, no estimate is provided.

These statistics show how well over 92% of Maine households hit by the Obamacare individual mandate tax are low- to middle-income Maine households earning below $75,000.

Maine’s income distribution of those affected with this tax is significantly higher than the national average according to public statements made by the IRS.

While it may not be convenient for those debating tax reform to talk about the individual mandate penalty as a tax, it is clearly having a direct negative  impact on tens of thousands of Maine people, who face a penalty of $695 per adult and $347.50 per child who is uninsured, or a 2.5% tax on the adjusted gross income of each of these low- and middle-income households.

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