Federal Individual Mandate Repeal and State Implementation

2017 Tax Cuts and Jobs Act: Individual Health Insurance Mandate Repealed

Under the 2017 Tax Cuts and Jobs Act, Congress passed legislation that effectively repeals the individual health care mandate after 2018 by eliminating the Federal penalty associated with individuals who do not have health insurance.

Prior to 2019, individuals were required to have health insurance either through their employer, the government, or on their own.  If they did not have coverage, a Federal penalty was applied promulgated by the Affordable Care Act. The Federal penalty remains in effect for the 2017 and 2018 tax year filings. If an individual did not have health insurance in 2017 or 2018, they must pay a Federal penalty of the greater of $695 per adult ($347.50 per child) or 2.5% of household income in excess of their applicable tax filing threshold.

Beginning 2019, under Federal law, health insurance coverage is not mandatory for Federal purposes, and you will not incur a Federal penalty for noncoverage. However, this may not be the case for the State you live in. Even though the Federal government no longer requires you to have health insurance, state law may require you to have health insurance or pay a state penalty. Some states have already passed, or are currently considering, their own individual health care mandates. To date, the following states that have passed laws to establish the individual mandate: California (begins 2020), the District of Columbia (begins 2019), Massachusetts (began 2006), New Jersey (begins 2019), Rhode Island (begins 2020), and Vermont (begins 2020). If you live in any of the listed states, you will need proof of insurance to avoid the individual mandate penalty. For this purpose, you should receive a government form such as Form 1095-A, 1095-B, and/or 1095-C, or you may receive a certificate from your health insurance company. Please be sure to provide us with copies of these applicable documents. For California residents without health insurance in 2020, you will owe a state penalty of the greater of $695 per adult ($347.50 per child) or 2.5% of state household income. Other states may have different penalties.

Please call our office if you have specific questions regarding the individual mandate and how it applies to you. It is possible that additional states will pass their own version of the individual mandate so please be sure to notify us if you are without health insurance as there may be a penalty in your residential state. There may be penalty exemptions available to you depending on your circumstances. This is a rapidly changing area, and we want to assist you in making sure you stay in compliance.

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