People “think” the ACA Individual Mandate and its “penalty” is gone thanks to the Tax Cut & Jobs Act of 2017. But is it and why are so many confused about it?

As happens so often, people hear about an action taken by some level of their local, state or Federal Government authority and misunderstand its effect it has on them as well as the timeline for that effect in their life. The ACA Individual Mandate (IM) is addressed in the Tax Cut & Jobs Act of 2017 (TCJA). But two things seem to be confused.

One, its being reported that the IM is “repealed” by the TCJA but what is really more accurate is that the penalty for not having medical insurance coverage is simply being set to zero. As we’ve discussed in previous Posts, every effort to R&R the ACA by the GOP has included setting the penalty for non-compliance to zero. As discussed before, at any time in the future a new Congress, probably Dem but possibly GOP, can reset the penalty for not having coverage to what ever it decides and even higher that the levels within the original IM of the ACA. That should not be defined as “repealed”!

The second issue is that many people think they do not have to worry about a tax penalty for not having medical insurance coverage in 2018? That’s understanding is wrong. The IM and its penalties remain in place for the tax year 2018. In a statement that some called a “finger in the air to Americans” retiring IRS Commissioner Koskinen stated that the IRS will vigorously enforce the ACA IM penalty for tax year 2018. So folks, don’t let your coverage lapse.

We have started to see the next phase of the IM “repeal” as prognosticators predict and promise that the elimination of the IM will lead to a spike in premiums and huge drop in the number of Americans will health insurance. Seriously, do you think folks could tell the difference in their premiums after what they have felt so far over the past 8 years? Well, let’s wait to see shall we?.

My bet is that eliminating the IM will have minimal affect on citizens who do not get their health insurance through their employer. I’m certain that many individual States will take actions on their own to mandate coverage, especially Liberal states with a highly subsidized Exchange. But, even that action will not produce any noticeable change in coverage.

Those states suing about the TCJA or President Trump or taking other steps within their state will be busy for the next 2 years. They will see and probably resist the growth in Association Health Plans, the introduction of selling medical insurance cross state lines, as well as Short Term Medical plans.

So, if you are in the consulting business, are a CPA, or other tax preparer it would be helpful to clarify this issue with your clients and prospects. They may think you are really smart. They may just think ho-hum. But, you will be clarifying for them something that may save them some money.

That’s it for this week. Short Post, I know, but that’s because the subject matter called for no more and also because we’re focused on a few other topics in the weeks to come.

Let me know what you think.
Thanks for your feedback. It confirms for me that we are all in this together.

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf
It stands for “walk the faith”.

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