TAX REFORM AND THE ACA


The Tax Reconciliation Act

Individuals

Congress has now repealed the Affordable Care Act’s (ACA) individual shared responsibility penalty. The act does not particularly repeal the individual mandate as such, it zeros out the dollar amount and percentage of income penalties imposed by the mandate beginning in 2019. Individuals must continue to purchase minimal essential health coverage or pay the penalty for 2017 and 2018 tax filing years. The IRS has announced that it will reject electronic filings of taxes for 2017 that do not claim coverage or an exemption, or include a payment of the penalty.

The exchanges will continue to operate and offer premium tax credits for consumers with income below the 400% poverty level to keep premiums affordable. Coverage will continue for all consumers regardless of preexisting conditions and premiums will not be affected due to an individual's health status.

The provision of the ACA requiring exchanges and the IRS to determine eligibility for exemptions from the mandate remain in place. It is unlikely individuals will continue to apply for exemptions after the penalty is repealed.

Entities

Other provisions of the ACA remain in force. Section 6055 of the Internal Revenue Code, requiring those who provide “minimum essential coverage,” including insurers, employers, and government programs, to provide covered individuals a statement of coverage and report specific information to the Internal Revenue Service. The tax bill repeals neither the reporting requirement nor the penalties for entities who fail to report.

Large Employers

The employer mandate, the penalties that enforce it, and the reporting requirements remain in place.

  • a penalty for employers who fail to offer minimum essential coverage to full-time employees if any employee receives premium tax credits through an exchange, calculated on a per-employee basis for all full-time employees; and

  • a penalty for employers who offer minimum essential coverage but do not offer “minimum value” coverage, applies for each full-time employee who receives premium tax credits through an exchange.

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