May 7, 2013
Get ready for the Internal Revenue Service to play a dominant role in health care. When Obamacare takes full effect next year, the agency will enforce most of the laws involved in the reform—even deciding who gets included in the health-care mandate.
"The impact of the IRS on health-care reform is huge," said Paul Hamburger, a partner and employee benefits lawyer at Proskauer.
"Other agencies like Social Security will be checking for mistakes, but the IRS is the key enforcer," Hamburger said. "It's also going to help manage who might get health care."
In its 5-4 ruling last year, the Supreme Court upheld the law's mandate that Americans have health insurance, saying that Congress can enforce the mandate under its taxing authority and through the IRS.
As a result, the agency has to administer 47 tax provisions under Obamacare. They include the right to levy a penalty against businesses and individuals who don't provide or acquire insurance. Noting that the IRS will collect the penalties, the decision labeled them a tax.
The IRS also has to determine how to distribute annual subsidies to 18 million people who make less than $45,000 a year and thus qualify for subsidies in buying health coverage, as well as how to deliver tax credits to small businesses that buy coverage for workers.
In addition, the agency will collect taxes on medical devices and a Medicare surtax on people making more than $200,000 a year, as well as conducting compliance audits of tax-exempt hospitals.
The financial burden for all this IRS enforcement is expected to total $881 million for fiscal years 2010 through 2013, according to the Treasury Department.
But former IRS Commissioner Douglas Shulman told Congress last year that he would need another $13.1 billion for the job in 2014. It's uncertain as to whether the funds will be forthcoming from Congress, which has cut the IRS's budget in each of the past two years.
One step the IRS has taken on health-care exchanges is drawing another round of lawsuits that accuse it of forcing more people into the system.
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