Benefits Buzz

Individual Mandate Clarification

Posted on May 8th, 2018

There seems to be a lot of confusion about the status of the Individual Mandate, so we thought it would be appropriate to provide some clarification on its status.

  • The Tax Cuts and Jobs Act that was signed into law at the end of 2017 made the Individual Mandate penalty $0 starting with the 2019 tax year. Technically, the Individual Mandate is still in place, but there will be no federal penalty for failing to have health insurance. This will leave open the possibility that a financial penalty could be restored at a later date, though most people don't think that has a chance under the Trump administration.
  • The Individual Mandate is still in place for the 2018 tax year. When you file your federal tax return that is due by April 15, 2019, you will have to indicate that you had health insurance, claim an exemption, or pay a penalty. This penalty is capped at 2.5% of household income.
  • There are some new exemptions to the Individual Mandate that can be claimed for 2018. For counties where there is only one carrier option available on the Marketplace, a hardship exemption may be claimed. Additionally, a hardship exemption may be claimed if the only plans available on the Marketplace provide coverage for abortions and this is contrary to one's own beliefs.
  • While the Individual Mandate penalty is being zeroed out next year, some states are considering a state-based penalty for their residents who are uninsured. This would be more likely to occur in blue states, but we'll have to see how this plays out.

Questions still remain as to how the change to the Individual Mandate may impact the Employer Mandate. Some have suggested that it's inequitable to keep the Employer Mandate in place when its primary purpose is to support the Individual Mandate.

At this time, there appear to be no immediate changes expected for the Employer Mandate. However, we may eventually see some changes to the reporting requirements, which have been used, in part, to help enforce the Individual Mandate.

Do you have a question about the Individual Mandate? Ask the Expert!


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