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ACA – The Individual Mandate is now Penalty Free


By Marc S. Wise, Esq. 

The recently enacted Tax Cuts and Jobs Act was signed into law on December 22, 2017. One significant change related to the individual mandate under the Affordable Care Act. 

The individual mandate requires most individuals to have a minimum level of health insurance coverage. The failure to have the required minimum health insurance coverage will subject the individual to a federal tax penalty of $695 for each adult or 2.5% of the household income in excess of filing thresholds, whichever is greater. 

Effective January 1, 2019, the dollar amount and percentage of income penalties for failing to have the required health insurance coverage has been reduced to zero. Due to the way the Tax Cuts and Jobs Act was enacted through budget reconciliation, the actual individual mandate could not be repealed. Individuals are still required to have health insurance. However, no penalties will be incurred for the failure to have health insurance. 

Individuals will still be subject to the penalty for 2018. No changes were made to the employer mandate. Applicable large employers (50+ full-time equivalent employees in the prior calendar year) must still offer affordable, minimum coverage health insurance to full-time employees (30+ hours per week) or potentially face significant penalties.