Tax Analysts Blog

In Massachusetts, Tax Collectors Enforce Healthcare Mandates

Posted on Jun 15, 2009

The Bay State's pioneering healthcare program -- signed into law in 2006 by then-Governor Mitt Romney -- gives us a real world preview of what the Obama healthcare plan might look like. There is a healthcare exchange (called the "Health Connector") that facilitates the purchase of insurance by individual and small business. There are subsidies for low-income households and individuals. And there are mandates that individuals who can afford insurance must purchase it and that businesses with more than 10 employees must offer it. As a result of all this, over 97 percent of the state’s population has health coverage, according to a report by the state’s Division of Health Care Finance and Policy.


Thanks to the prodigious efforts of the Massachusetts Department of Revenue, the individual mandate is running smoothly from an administrative perspective. According to a DOR Report, only 5 percent of the 3.93 million adult tax filers subject to the individual mandate reported being uninsured as of December 31, 2007. Those 5 percent who are deemed able to afford coverage and don't have it must pay a penalty. For 2009 the maximum penalty for tax year 2009 will be $89 a month ($1,068 for an entire year of noncompliance) for a person 27 or older with income over 300 percent of the federal poverty level ($31,212 or more for singles).

The employer mandate is enforced by the state agency that collects unemployment insurance tax -- the Division of Unemployment Assistance. In 2007 and 2008 employers who did not make a "fair and reasonable contribution" to their employees’ health insurance had to pay the DUA $295 per employee.

If individual and employer healthcare mandates become law -- as the President and most Democrats wish -- most of the population will have minimal additional interaction with the IRS. But for many small businesses and non-poor currently uninsured individuals, it is a new tax -- plain and simple. There are forms and instructions and record-keeping requirements and all the normal unpleasantries that go with paying these new taxes -- even if we give them other names like "penalties" and "contributions."

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