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News DOR Issues Health Care Report for 2008 & Draft Penalties for the Uninsured in 2010

  • Massachusetts Department of Revenue

Wednesday, December 9, 2009
Robert R. Bliss

DOR numbers show over 96 percent of adults filing health care information with tax returns had coverage at some point in 2008; 98.3 percent of filers complied with health care reform tax filing requirements


The Massachusetts Department of Revenue released a report today on compliance with the individual mandate in tax year 2008, the second year of enforcement of the mandate. The figures released today show that the vast majority of tax filers are insured and in compliance with the requirement to report that insurance on their tax form.

The Commonwealth's landmark health care reform legislation enacted in 2006 requires most adult residents 18 and over with access to affordable health insurance to obtain it. Starting in 2008, adult tax filers who could afford to purchase health insurance but who failed to do so were subject to penalties for each month of non-compliance in the tax year. DOR developed a new tax form, Schedule HC, to capture health insurance information from tax filers.

"The Department is once again pleased to report continued strong compliance with the health insurance tax filing requirement among Massachusetts tax filers, notwithstanding the added complexities in 2008 of having to report coverage for each month in the tax year," said DOR Commissioner Navjeet K. Bal.

"To date, only 1.7 percent of tax filers required to file health insurance information with their returns failed to comply in tax year 2008," she said. "The process this year required coverage for an entire year, not just for one day as was the case in tax year 2007," she said.

Based on health insurance information from 3.95 million adult tax filers, the DOR analysis concludes that slightly over 3.8 million, or 96.4% of these filers, had insurance at some point in calendar year 2008. Of the 3.8 million tax filers to report coverage, close to 96%, or 3.65 million filers, reported coverage for the full year or the entire period that the mandate applied to them. These high rates of tax filer coverage reinforce other evidence that Massachusetts continues to maintain strong rates of health insurance coverage even despite the economic downturn.

Roughly 53,000 tax filers, or 1.3% of filers, lacked insurance for all or part of 2008 but were deemed able to afford health insurance for the period without coverage and thus subject to a penalty. Over 84% of the tax filers subject to a penalty, or about 45,000 filers, were assessed the penalty on their tax return, down 25% from the 60,000 who were assessed a penalty in 2007. The remaining filers sought relief from the penalty by filing an appeal through the Health Connector.

To date, the Department has assessed $16.4 million in penalties on tax filers who lacked insurance for all or part of 2008. Of this amount, DOR has collected and deposited $12.9 million in penalty assessments to the Commonwealth Care Trust Fund through the end of October.

The numbers reported today do not include the health insurance status of children or those who do not file tax returns and is subject to post-filing verification and enforcement by DOR. It also does not include demographic data on the uninsured, however, the Department is exploring opportunities to release more detailed data on the characteristics of uninsured filers based on information reported on tax returns and other data sources available to DOR in the spring.

The Department also issued draft penalty guidelines on tax penalties for not complying with the individual mandate in 2010. Penalties will continue to apply to adults 18 and over who can afford health insurance, based on separate standards adopted by the Board of the Commonwealth Health Insurance Connector Authority. By statute, the penalties may not exceed one-half of the monthly cost of the least expensive health insurance plan available to an individual through the Health Connector.

Penalties in 2010 will accrue for each month of non-compliance with the individual mandate, with a grace period permitting lapses in coverage of no more than 63 days.

The maximum penalty for tax year 2010 will be $93 a month ($1,116 for an entire year of non-compliance) for a person 27 or older with income over 300% of the federal poverty level ($32,496 or larger for singles). The 2009 penalty for this same individual was $89 a month or $1,068 annually. For individuals up to age 26 with income over 300% of the federal poverty level, the penalty will be $66 a month or $792 annually.

As was the case in 2009, there is no penalty for individuals with incomes up to 150% of the federal poverty level ($16,248), as Commonwealth Care is free at this income level. For individuals with incomes between 150.1% and 300% of the federal poverty level, penalties increase with increasing incomes. The penalty for those with income between 150.1% and 200% of the federal poverty level ($16,249 and $21,660) will be $19 per month ($234 annually). The penalty for those with income between 200.1% and 250% of the federal poverty level ($21,661 and $27,084) will be $38 per month ($462 annually). And the penalty for those with income between 250.1% and 300% of the federal poverty level ($27,085 and $32,496) will be $58 per month ($696 annually).

Penalties for married couples who can afford health insurance but who lack coverage will equal the sum of the penalties for each spouse.

"These proposed penalty guidelines continue to strike the right balance in terms of fairness and simplicity. It imposes lower penalties on lower-income individuals, reflecting their eligibility for subsidized, lower-priced health insurance and they ensure that penalties are high enough to encourage those who can truly afford to buy health insurance to do so," said Revenue Commissioner Navjeet K. Bal.

The penalty guidelines are 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 December 18, 2009.

2008 Health Care Report 

Draft 2010 Tax Penalties 

Massachusetts Department of Revenue  

The Massachusetts Department of Revenue manages state taxes and child support. We also help cities and towns manage their finances.


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