SPIN:  "Penalties are not a tax."

TRUTH: Tell that to the more than tens of thousands of taxpayers who were penalized on their 2007 and 2008 tax returns. These unfortunate "mandate avoiders" paid personal income tax collections of over $12.4 million in penalties imposed under the individual mandate. Collections for 2008 were not yet available at the time of this writing. 

Penalties are collected via the Department of Revenue and late payment, partial payment or nonpayment is enforced by the D.O.R. as income tax evasion complete with interest, late fees and eventual wage garnishment, seizure of bank accounts and liens on property. It is uncertain if imprisonment is an optional punishment. This is true - this is in the law. Really!

MA residents received postcards with a notice: Act Now to Avoid Tax Penalties! So, the question for the state is: Did you mean that penalties are not a tax in that they are not embedded in the state tax code, and are not, therefore, a legal charge against a citizen's person, property or activity for the support of government, but more like a separate levy that is predestined to flow directly into the Connector Authority's coffers?

The bottom line is that taxes were increased for certain residents, and the tax code wasn’t changed. Period. See the tax law here and the Department of Revenue's regulations here .

Currently in Massachusetts, residents who opt to pay the penalty for various important reasons, affordability being the most prevalent, actually subsidize the non-paying insured while the penalty-payers remain uninsured. This saves money that otherwise would have been needed from the state and Federal governments but is an indirect tax on those who can not afford the expense in the first place. Thus, these residents are cash-cows, unwittingly contributing to reauthorization of the Section 1115 Demonstration Waiver which requires that the state remain "budget neutral." This means that the state may not cost the Federal government any more than it would have to operate a Medicaid program without a waiver in order to continue to receive Federal funding. The state is struggling to keep this unsustainable health insurance scheme propped up even with Federal funding. This model is not fiscally responsible nor does it provide equitable, affordable care for all.

This idea is fundamentally unfair and will not bring medical care to the many, but rather, it will progress to greater personal debt and lead to criminalization of those who cannot afford it.

SPIN: "Affordability standards are fair and carefully calculated to represent what real people can spend."

TRUTH: Affordability levels are set by the Connector Authority and are based on the very limited and antiquated ""Federal Poverty Guidelines" (FPG). Although the FPL guidelines are updated yearly, they do not come close to representing the cost of living in this day and age, much less the true cost of living in Massachusetts which is more expensive than other states. There has also been no recognition that the cost of living varies from region to region across the state. 

As quoted from Connector Authority spokesman Richard Powers, "The affordability schedule is based on data and analyses regarding the price of health insurance, what families can afford, income growth, and yearly changes in federal poverty level brackets." Arbitrary boardroom formulas and statistics determine what you can afford! Necessary expenses including Massachusetts' notoriously high costs for housing, utilities, educational expenses, child and elder care, transportation, motor vehicle insurance, the ever-increasing cost of food, heat, gas, property taxes, snowplowing costs and so much more are not part of the calculation. Neither is the cost of debt repayment or the need to save for retirement which will be necessary to supplement monthly Social Security checks. And to top this off, the Massachusetts legislature recently passed an increase of the state sales and income taxes. 

For MassHealth and Commonwealth Care, court-mandated child support or alimony paid out, half of self-employment tax (a self-employed person pays twice as much in taxes) or any similar obligations are additional expenses that are not considered as grounds for an adjustment because of Federal regulations which require that line 22 on Federal Form 1040 be used to determine eligibility and affordability. These items are found after line 22 (total income) but before line 37 (adjusted gross income). However, affordability for Commonwealth Choice is figured by line 37. This is discrimination against residents 300% FPL and below.

If you are self-employed, you are required to submit your prior year tax return when you apply for the insurance. You have to hope that business is going to be as good in the current year as it was during the previous year, or you will have great difficulty trying to pay the premium assigned to you based on better times. This discriminates against the self-employed.

If you are seeking a hardship exemption, the Connector wants to know what you expect to make in the current calendar year. This includes all forms of income - earned income minus your deductible business expenses as well as unearned income such as interest or dividends. All of this is rather difficult to estimate for various obvious reasons, but you give it your best shot. You definitely don’t want to get caught with your pants down because the Connector warns you that if you underestimate, and the actual amount you report in your tax return would have been sufficient to afford insurance, your certificate of exemption may be revoked, and you may be assessed the penalty, along with interest and other tax penalties for underpayment of taxes.

We’d like to know why the Connector has no stated or written options if you overestimate, don’t receive a certificate of exemption, and the actual amount you report in your tax return shows that you were eligible for the exemption. Does the Connector mail you a refund with interest for the premiums you struggled to pay?

SPIN: "People who can't afford the insurance can file for an exemption."

TRUTH: Requirements to file for a hardship exemption in order to obtain permission to remain uninsured and avoid penalties are limited to just a few horrific situations. See Hardship Criteria for a waiver here.

See here for "Appeals" criteria. Appeals are limited by income level. If you fall into the lower income levels (300% FPL and below) and know that you can’t afford the insurance, you must “appeal” the Connector’s decision that the insurance was affordable. If you win the appeal, you will be granted a temporary "hardship exemption" and won’t have to pay a penalty, but the rules are narrow and strict - and you will be uninsured. If your appeal is denied, you will be required to pay the penalty. See Exemption Form here . See here for more on APPEALS and EXEMPTIONS. See Appeal Request Form here.

Those who fall into the lower income levels (below less than 300% FPL) 
- See Federal Poverty Guidelines - may not appeal for any reason whatsoever. They may be eligible for an "exemption", but here again, the rules are narrow and strict. See here for more on APPEALS and EXEMPTIONS. In other words, aside from the most dire circumstances, forget it. 

In other words, aside from the most dire circumstances, forget it. The appeals/exemption process is not only complicated and full of stringent, bureaucratic rules that must be strictly followed, it is also very temporary. You have to be sleeping on Uncle Fred’s sofa and begging for your meals and, if you haven’t cleaned up your act soon, you will have to go through this process again within a specified period of time. See the appeals request form and rules.

If you are already enrolled in a premium-bearing Commonwealth Care plan, you may not file for a waiver or reduction of your co-payment but can file an appeal for a reduction of the premium. To file for the latter, you must continue to pay the premiums that you can’t afford until you have submitted your appeal application. If your application is denied, and you owe overdue premiums, you must pay at least the premiums that were more than 60 days past due at the time your application was filed. If you are filing for a second time, and your previous application was not successful, the Connector may require payment of overdue and future premiums while you application is pending. If no payment is received, you will be terminated, owe a penalty and be uninsured.

If you are applying for a waiver of your premium before you enroll in a plan, you still have to pay the first month’s premium, otherwise, your enrollment in the plan can be denied. If the waiver is approved, you will be reimbursed in 6 to 8 months. Obviously, it doesn't matter to the Connector that you have financial problems and might not be able to wait this long. By the way, the reimbursement does not include interest.

You will be given a hearing, and if you are denied the waiver/reduction, you can file an appeal using the Connector’s Appeals Request Form. If your appeal was initially rejected, you can continue to appeal the case up to your Superior Court.

It appears that the appeals process does not constitute due process under the law. True jurisprudence assumes innocent until guilt is proven. The Connector mechanism is backwards. 

Feel free to call the Connector and see what your chances are. 

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