The Trump Administration has picked apart the Affordable Care Act on a semi-regular basis since Trump took office, but one facet of the health care law that remains—for another half-year, at least—is the Individual Mandate Penalty.
The existence of the Individual Mandate Penalty amidst widespread changes to the Affordable Care Act is just one feature that tax pros and financial services providers need to be aware of as they advise clients for the remainder of this year, says tax pro Arthur Werner. Werner covers the mandate and other Affordable Care Act provisions in his webinar for Eli Financial, “Tax Reform & the Affordable Care Act: Compliance in 2018 and Beyond.”
Form 1095: One More Year to Go
The Individual Mandate was one of the less-popular provisions of the Affordable Act; it stipulates that all Americans must have health insurance or face a penalty. The mandate was the foundation of the Republicans’ Supreme Court challenge to the law—which nearly won—and was publicly unpopular, according to surveys like those from the Urban Institute Health Policy Center.
The so-called Obamacare tax penalty for being uninsured is $695 per adult; half that for children under 18; with a maximum household outlay of $2,085, or 2.5 percent of household income, whichever is higher. Fees are to be paid when the tax return is filed, although there are some exemptions. Those who are unemployed can in some cases get a waiver for the penalty, and unpaid fees are handled though tax refund withholdings in future years.
Proof of insurance is made on Form 1095.
Trump’s tax plan, signed last December, eliminated the fine but not until the end of this year.
“The penalty won’t go away until 2019, and that means you still will owe Uncle Sam if you didn’t have health insurance—or an exemption from the mandate—in 2017,” reported CNN. “The same holds true for this year.”
Combat ‘Mass Confusion’
The announced end to the rule but the next-year end-date left many taxpayers perplexed, CNN added.
“There’s just mass confusion out there,” Steven Stasoiski, a tax accountant and insurance agent in Seal Beach, Calif., told the network. Some clients went ahead and dropped their insurance, he said, meaning they will be in for a surprise next spring.
Adding further to the confusion are moves by some states to enact their own mandates, reports Fox News. The states made the move to support the Affordable Care Act and maintain low insurance rates, with New Jersey, Vermont, Massachusetts, and Washington, D.C. passing mandate laws, and Maryland and California contemplating them.
“It is imperative that we do everything we can to not only protect the … population that we have insured with this law, but to encourage even more people to sign up,” said New Jersey Health Commissioner Shereef Elnahal.
Other components of the Affordable Care Act look likely to remain in place, reports Vox.
“Obamacare, the imperfect product that it is, isn’t going to collapse without the mandate,” Vox writer Dylan Scott said. “The law has proved rather resilient under Trump: Nearly as many people signed up for coverage for 2018 as did for 2017. The subsidies deserve the credit: For people with lower incomes, they help make insurance genuinely affordable or even free.”
With plenty of confusion among taxpayers and constant Affordable Care Act updates scrolling through news sites, said Werner, it’s important that tax pros be able to offer sound, current advice.
