According to a recent poll, nearly one third of Americans believe that President Trump has already repealed the Affordable Care Act (ACA). Last month, Trump boasted that the Republican tax legislation “essentially repealed Obamacare” by eliminating the requirement that all individuals have health insurance.
That claim is not quite true.
The ACA includes the Individual Shared Responsibility Provision (commonly referred to as the “individual mandate”) which requires everyone to have health insurance coverage (e.g., Minimum Essential Coverage or MEC) for the entire year. Those who fail to maintain MEC may qualify for an exemption. If not, they must pay a financial penalty to the IRS.
Section 11081 of the Republican tax bill, passed last month by Congress and signed into law by Trump, keeps the individual mandate in place, but repeals the penalty for not having health insurance. The Congressional Budget Office predicts that repealing the penalty will result in 13 million more uninsured Americans, including 5 million who are Medicaid eligible, but not enrolled.
However, the penalty repeal does not take effect until 2019.
Those who incorrectly believe that Trump and congressional Republicans repealed the ACA may be in for a surprise when they file their 2017 federal income taxes beginning later this month; and again next year when they file 2018 taxes. The IRS announced that it will not accept tax returns that fail to address ACA health coverage requirements. Tax filers must report full-year health coverage, claim a coverage exemption, or include a shared responsibility payment to have their tax returns (and tax refunds) processed by the IRS.
Although a record 8.8 million Americans signed up or renewed health coverage through www.healthcare.gov, those who mistakenly believe that the Republican tax plan repealed the ACA may not have signed up for health insurance during open enrollment. Further, studies show that millions of people who were eligible for the ACA’s Premium Tax Credits and Medicaid expansion were unaware that financial assistance was available or failed to apply.
There are, however, a few options available for those without health coverage and facing an IRS penalty. Persons eligible for Medicaid or CHIP can apply and enroll at any time. Others might qualify for a Special Enrollment Period (SEP) to sign up for health insurance through the ACA marketplaces outside of open enrollment. But only certain conditions or triggering events, like a permanent move, qualify someone for a SEP, and the Administration is limiting their availability.
The ACA also provides exemptions from the individual mandate, for example, during periods of incarceration, short coverage gaps, or other hardships. Some exemptions must be applied for through the marketplaces; while others must be claimed at the time of tax filing.
Those without health coverage or an exemption in 2017 and 2018 must pay a penalty to the IRS. The ACA, however, does provide some relief for those without insurance. The penalty amount is capped at the cost of the national average premium for a bronze level health plan available through the Marketplace.
No one wants unwelcome surprises, at tax time, and especially when it comes to health care. Congress and the administration need to move away from stealth maneuvers to take health care away from the people of all walks of life, and support bipartisan efforts to stabilize the private insurance market and expand health care coverage for all.
