The details were unveiled on Thursday in a health care overhaul bill supported by key Senate democrats looking to fulfill US president Barack Obama’s top domestic priority.

The US Congressional Budget Office estimated the fines would raise around $36 billion over 10 years. Senate aides said the penalties would be modelled on the approach taken by Massachusetts, which now imposes a fine of about $1,000 a year on individuals who refuse to get coverage. Under the federal legislation, families would pay higher penalties than individuals. Called “shared responsibility payments”, the fines would offset at least half the cost of basic medical coverage, according to the legislation. The goal is to nudge people to sign up for coverage when they are healthy, not wait until they get sick.

In 2008, employer-provided coverage averaged $12,680 a year for a family plan, and $4,704 for individual coverage, according to the Kaiser Family Foundation’s annual survey. Senate aides, who spoke on condition of anonymity, said the cost of the federal plan would be lower but declined to provide specifics. The legislation would exempt certain hardship cases from fines, which would be collected through the income tax system.

The new proposals were released as the US Congress neared the end of a weeklong July 4 break, with lawmakers expected to quickly take up health care legislation when they return to Washington. Obama wants a bill that would provide coverage to nearly 50 million Americans who lack it.