2008 Health Insurance Penalties

January 2, 2008

According to the State House News Service, a Massachusetts adult earning between 150 percent and 200 percent of the federal poverty level would face penalties of $210 per year for not obtaining health insurance, under draft guidelines the Patrick administration released last week. The penalties climb for higher earners, with those over age 27 who earn more than three times the poverty threshold facing losses of $912 per year. The Department of Revenue, which determined the levies, based the figures on the price of one-half the lowest-cost plans available through the state's Health Insurance Connector Authority.

Under the new formula, the amount an uninsured resident pays for 2008 varies by income and how long the resident goes without insurance. For instance, those 26 and younger who earn too much to qualify for low-cost insurance and who go the whole year without coverage would pay a $672 penalty. Those 27 and older would pay $912, the maximum. Those who have coverage for part of the year would pay a corresponding amount of the penalty.The fees are based on half the cost of the least expensive insurance plan available to each resident but are capped to avoid excessive fees. Thus, a 60-year-old resident of Boston, who would pay more than $4,600 a year for health insurance provided by the state, could have been hit with a $2,300 penalty. But the maximum possible penalty is $912 for all residents.

The draft regulations are available at the revenue department's website at mass.gov/dor. Penalties will pile up each month and be factored into the state income tax collection process. Penalties collected by the state will then be deposited in the Commonwealth Care Trust Fund, which is applied to offset the cost of subsidized health insurance. In 2007, the first full year since the health care expansion law became law in 2006, the state charged individuals without health insurance a flat $219, as prescribed in the statute. Determining the 2008 charges was assigned to state tax officials. The statute called for penalties up to one-half of the Connector's coverage offerings, and the administration could have adjusted the scale of penalties by calculating from a lower percentage base. DOR spokesman Robert Bliss said, "If the Legislature had wanted it set at some lower number than 50 percent, then they would have said it. So there was the flexibility there, but there was also the decision not to factor in age or geography. So there's clearly a balance."

Please feel free to e-mail any questions, comments or concerns. We will continue to update you as more information becomes available.

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