This is the Fifth (and definitely not last) in a series of posts that have me a bit conflicted. They could be interpreted as political, and, as advice, some of it may be considered unethical, but the point of the posts is to point out things in the law that provide negative incentives, and, at the same time, point out actions that can have big negative consequences on someone receiving a Premium Tax Credit (hereafter referred to as a subsidy.) They are primarily designed to ensure that people don't make huge mistakes with huge consequences. They should not be interpreted as me suggesting that you manipulate the rules in any illegal or unethical way. If you continue reading these posts you will understand what I mean.
This is a strategy that deals with people who refuse to obtain, or are unable to obtain, minimum essential coverage. It's not a great strategy, unless you are REALLY die hard about not getting insurance and paying the penalty. The good news is that, if done right, I really can't see any way in which this strategy wouldn't work. It's still not legal, but that's what makes it so interesting, because they can't do anything about it (as best I can tell - you really need to make sure before you try it, I give no guarantees that it's accurate, and I advise against trying it.)
Here's the strategy: Just don't pay the penalty
What? That makes no sense!
Seriously. Don't pay it. Don't send in the form (whatever it will be) proving you have insurance, don't add the penalty to your tax return, and when they send a letter demanding it, just don't pay it.
But they'll send me to jail! Nope, can't do it. It's not allowed for the healthcare penalty.
But they'll garnish my wages! Nope, can't do it. It's not allowed for the healthcare penalty.
But they'll take it out of my bank account! Nope, can't do it. It's not allowed for the healthcare penalty.
But they'll take my property! Nope, can't do it. It's not allowed for the healthcare penalty.
So what can they do? They can take it out of any Federal refund you get - EVER. They can charge interest. They can send letters demanding payment.
So all you have to do is to make sure you never get a refund. If you owe the government money when you file your taxes, they can't take the penalty out of your refund. Just make sure your balance due is below the amount that gets you an underpayment penalty (I'm not going into specifics because I really don't want you to take this advice. To me, it's simply an intellectual exercise to expose the weaknesses and distortions in the tax portion of the law.) You also can NEVER get a refund - they're not going to forget. But besides that, all they can do is keep asking you to pay.
When I was researching this blog post I came across this article, which I feel I should give credit to since it was so perfectly what I was looking for: