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Will the Individual Mandate Be Enforced This Year?

Will the Individual Mandate Be Enforced This Year?

Posted Mar 01, 2018 by Jenifer Dorsey

Obamacare Repeal — Will You Have to Pay the Tax for 2017?

The Affordable Care Act remains law in 2018. That means most Americans must buy health insurance. And if they don’t, tax penalties still apply for your 2017 and 2018 tax years.

During his first month in office, President Trump promised to repeal and replace the healthcare legislation known as Obamacare, and the issue has been hotly debated but unsuccessfully resolved in the past year.

In December 2017, Trump signed into law a tax bill that eliminates the tax penalty for going without insurance.[1]

Confused?

You’re not alone.

What does the tax penalty repeal mean for you?

Here are some quick answers to your tax-related questions about health insurance last year, this year and in future.

Has Obamacare been repealed?

No. The Affordable Care Act, which is commonly referred to as Obamacare, remains law.[2]

As such, premium tax credits will continue to be available to those who qualify based on income, and the ACA’s other provisions still apply (for example: coverage is guaranteed regardless of health history and you can’t be charged more due to health status).[3]

Was the individual mandate repealed?

No. The individual mandate, which is formally called the individual shared responsibility provision remains in effect as well.[4]

It is important to note that the ACA’s individual shared responsibility provision – the mandate that you purchase health insurance, and the individual shared responsibility payment – the tax penalty you owe for failing to purchase health insurance, are two separate things as defined by the law. 

What was repealed under the new tax bill?

The Republican-sponsored tax reform bill signed into law on Dec. 22, 2017, repeals the individual shared responsibility payment, the tax penalty you owe if you fail to maintain minimum essential coverage.[5]

In plain language, that means that even though the mandate is still in effect, there will be no penalty if you don’t comply.

But don’t get too excited yet.

The repeal doesn’t take effect right away, and it is not retroactive. That means you could owe the payment when you file your taxes this year and next.

When does the tax repeal take effect?

It takes effect January 1, 2019.[6] That means the penalty still applies to the 2017 and 2018 tax years. If you didn’t/don’t have minimum essential coverage and are not exempt in:

  • 2017 – you could owe a penalty when you file your 2017 taxes in 2018
  • 2018 – you could owe a penalty when you file your 2018 taxes in 2019
  • 2019 – you will not owe a penalty

For Tax Year 2017, the IRS states on its website that it “will not consider a return complete and accurate if the taxpayer does not report full-year coverage, claim a coverage exemption, or report a shared responsibility payment on the tax return.”[7]

Federal agencies didn’t have to enforce the penalty for Tax Year 2016. Will the IRS really enforce it for Tax Year 2017?

Following President Trump’s Executive Order 13765 in January 2017, the IRS stated that it would accept returns from taxpayers who did not indicate their coverage status.[8]

That’s not the case this tax season. The IRS clearly states on its website that it will enforce the penalty for Tax Year 2017.[9] Be sure to consult a tax professional to discuss your specific circumstances.

Next steps

Did you know that major medical coverage isn’t the only type of health insurance plan you can buy? Alternative health plans are often more affordable than major medical.[10] And supplemental plans can help make your major medical insurance more affordable.

Learn more about alternative and supplemental health insurance.

Are you in between jobs or using an Obamacare exemption? A short-term medical plan is a low-cost alternative health insurance option to help out in case an unexpected illness or injury lands you in the hospital while you’re without major medical.

Find out the 7 Things You Need to Know About Short Term Health Insurance.

Looking for more ways to save on your health care costs? Look no further - check out these 5 Easy Ways to Reduce Health Care Costs and implement them today so you can save money tomorrow.

 


Legal Disclaimers

[1] Amendment of 1986 Code, Part VIII—Individual Mandate, Pub. L. No. 115-97 (2017). https://www.congress.gov/bill/115th-congress/house-bill/1/text

[2] Associated Press. “Is Obamacare Repealed, As Trump Said?” CBS News. Last updated Dec. 21, 2017. https://www.cbsnews.com/news/did-trump-repeal-obamacare-fact-checking-new-tax-bill-aca-individual-mandate/

[3] Jost, Timothy. “The Tax Bill and The Individual Mandate: What Happened, and What Does It Mean?” Health Affairs Blog. Dec. 20, 2017. https://www.healthaffairs.org/do/10.1377/hblog20171220.323429/full/

[4] Ibid.

[5] Amendment of 1986 Code, Part VIII—Individual Mandate, Pub. L. No. 115-97 (2017). https://www.congress.gov/bill/115th-congress/house-bill/1/text

[6] Ibid.

[7] Internal Revenue Service. “Individual Shared Responsibility Provision.” Last reviewed or updated Nov. 21, 2017. https://www.irs.gov/affordable-care-act/individuals-and-families/individual-shared-responsibility-provision

[8] Erb, Kelly Phillips. “IRS Softens on Obamacare Reporting Requirements After Trump Executive Order.” Forbes. Feb. 16, 2017. https://www.forbes.com/sites/kellyphillipserb/2017/02/16/irs-softens-on-obamacare-reporting-requirements-after-trump-executive-order

[9] Internal Revenue Service. “Individual Shared Responsibility Provision.” Last reviewed or updated Nov. 21, 2017. https://www.irs.gov/affordable-care-act/individuals-and-families/individual-shared-responsibility-provision

[10] Alternative health insurance plans do not comprise minimum essential coverage. They are not ACA-qualifying plans and are not meant to replace major medical health plans. See legal disclaimers: https://www.healthedeals.com/disclaimers