News  DOR Issues Health Care Report for 2007 and Draft Penalties for the Uninsured in 2009

  • Massachusetts Department of Revenue

Monday, December 22, 2008
Melissa Cummings

Report shows most adult tax filers in compliance with new law

The Massachusetts Department of Revenue today issued a final report on individual health insurance mandate compliance showing that 95 percent of adult tax filers were covered by health insurance last year as required by the state's historic health care reform law. DOR also released draft guidelines on tax penalties for not complying with the individual mandate in 2009.

The report detailing coverage in 2007, which is updated from an earlier June report, showed that only 5 percent of the 3.93 million adult tax filers subject to the individual mandate reported being uninsured as of December 31, 2007. This encouraging news follows last week's release of comprehensive survey data from the state's Division of Health Care Finance and Policy (DHCFP) estimating that over 97 percent of the state's entire population has health coverage. Notably, the DHCFP findings are based on surveys conducted in the summer of 2008 and thus capture gains in health coverage from early this year. They also reflect the health insurance status of individuals not included in the DOR data (such as children, who have very high health insurance coverage rates).

Department of Revenue Commissioner Navjeet Bal noted that only 1.4 percent of tax filers required to file health insurance failed to do so on their tax return. "This better-than-98 percent rate of compliance shows that citizens understand the process and have accepted the Schedule HC (Health Care) as part of the tax form," she said.

Penalties for 2009 will continue to apply only to adults ages 18 and over who can afford health insurance, based on separate standards adopted by the Board of the Commonwealth Health Insurance Connector Authority on an annual basis. By statute, the penalties must not exceed one-half of the monthly cost of the least expensive health insurance plan available to an individual through the Health Connector.

In 2009, individuals must be enrolled in health insurance policies that meet minimum creditable coverage standards defined in regulations adopted by the Commonwealth Connector. The penalties in 2009 will accrue for each month of non-compliance with the individual mandate. However, there is a grace period permitting lapses in coverage of no more than 63 consecutive days.

The maximum penalty for tax year 2009 will be $89 a month ($1,068 for an entire year of non-compliance) for a person 27 or older with income over 300 percent of the federal poverty level ($31,212 or more for singles). The 2008 penalty for this same individual was $76 per month or $912 per year. The maximum penalty increased slightly compared to 2008 due to slight increases in health plan prices and the requirement that individuals have prescription drug coverage as of Jan. 1, 2009. The penalty for those with incomes over 300 percent of the federal poverty level and ages 18-26 will be $52 per month ($624 per year).

To ensure simplicity and fairness in the penalty guidelines, 2009 penalties for individuals with incomes up to 300 percent of the federal poverty level will be the same as those in 2008.

Individuals with incomes up to 150 percent of the federal poverty level ($15,612 for singles) will face no penalty, as Commonwealth Care is free at this income level.

The penalty for those with incomes between 150.1 percent and 200 percent of the federal poverty level ($15,513-$20,808 for singles) will be $17 per month ($204 annually).

The penalty for those with incomes between 200.1 percent and 250 percent of the federal poverty level ($20,809-$26,016 for singles) will be $35 per month ($420 annually).

The penalty for those with incomes between 250.1 percent and 300 percent ($26,017-$31,312 for singles) of the federal poverty level will be $52 a month ($624 annually).

Penalties for married couples who can afford but who do not enroll in health insurance will equal the sum of the penalties for each spouse.

The penalty guidelines are being issued as a working draft to allow the public the opportunity to submit written comments to the Department of Revenue. Comments can be emailed to the Department's Rulings and Regulations Bureau at by January 23, 2009.

"These proposed guidelines continue our efforts to establish fair, effective, and easy-to-explain rules to encourage people to comply with the individual health insurance mandate. We want taxpayers to have as much information as possible, which is why, as we did last year, our Web page ( will have lots of information and a variety of tools, including an online affordability calculator and an informational video presentation, to assist taxpayers in preparing Schedule HC," said Commissioner Bal.

The demographic makeup of uninsured tax filers in 2007 is broadly consistent with separate health insurance status surveys indicating that younger, lower-income, unmarried men comprise a disproportionate share of the uninsured. Close to 60 percent of uninsured tax filers were under age 40, and where gender information was available, two-thirds of uninsured tax filers were men. Moreover, with the exception of Nantucket and Martha's Vineyard, the distribution of uninsured tax filers was comparable to each county's population. For instance, Suffolk County residents comprise 11 percent of the state's population and 12 percent of all uninsured tax filers, while Middlesex County, the largest in the state, has 23 percent of all residents and 20 percent of the uninsured tax filers.

Roughly 118,000 adults or fewer than 3 percent of tax filers were uninsured but deemed able to afford health insurance in tax year 2007 (based on standards adopted by the Health Connector) and thus potentially subject to the 2007 penalty (loss of a personal tax exemption, valued at $219 for an individual). Of those, about 51,000 qualified for No Tax Status or a Limited Income Credit due to sufficiently low incomes, which in most cases nullified the penalty and in some cases reduced it in 2007. In addition, about 6,000 appeals were forwarded to the Health Connector for review.

Only 1.9 percent of tax filers, roughly 76,000 adults, was uninsured and deemed unable to afford health insurance and thus not subject to the penalty. There was very little variation in the impact of the affordability test by overall tax filer, age and gender categories, with about 60 percent of uninsured individuals across these categories indicating that they could have afforded health coverage.

TIR 09-1: Individual Mandate Penalties for Tax Year 2009

Massachusetts Department of Revenue Data on the Individual Mandate and Uninsured Tax Filers Tax Year 2007 

Division of Health Care Finance and Policy - Health Insurance Survey 

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