Included in the recently passed tax bill is a provision repealing the individual mandate penalties, put in place by the 2010 Affordable Care Act (ACA). The ACA’s individual mandate requires individuals to demonstrate they have health insurance that meets specified standards and imposes a tax penalty on individuals for failure to do so, if no exemption applies. Enforced by the Internal Revenue Service, the penalty per household in 2017 is the greater of $695 per person ($347.50 per child under 18) or 2.5 percent of household income, and would have risen annually with inflation. The tax bill effectively repealed this provision by zeroing out the penalty, for years beginning with January 2019.
Without the individual mandate, individuals and households will escape tax penalties for failing to purchase health insurance or dropping coverage. However, with less people enrolling in coverage, some health experts believe insurance premiums will rise as a result of the shrinking numbers of participants in the health insurance risk pools. The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) estimate the repeal of the individual mandate will result in over ten million additional uninsured individuals by 2027 and save the government over $300 billion over a ten-year period, as fewer people are insured and no longer qualify for the ACA’s premium tax credits.For more information, please visit our Health Care Reform Topic Page, and the REALTORS® Insurance Marketplace.