Despite the recent efforts by Congress to repeal and replace Obamacare, (more officially known as The Affordable Care Act) much of the healthcare bill is still in place. However, there have been changes made to the bill’s impact on people who are unable to pay or wish not to carry insurance. The portion of the bill that forces a penalty for those people who do not carry health insurance throughout the year has been removed and no longer valid for the 2019 tax year. The penalty portion of the bill is known as the Individual Mandate.
The Individual Mandate states that all U.S. individuals must carry a minimum amount of health insurance each year. Anyone who fails to do this must pay a penalty to the United States Government in the form of a tax. The pretext of the penalty is to use this money to offset the expenses for insurers in order to keep the Affordable Care Act more affordable for everyone. One of the reasons that all health insurance tends to be costly is because insurance companies weigh the balance between what they pay out to providers versus what they take in for premiums. If they have to cover pre-existing conditions, then the insurance becomes more costly. One of the reasons for the mandate is that the ACA- (Affordable Care Act) also known as Obamacare requires that Obamacare insurers accept all people with pre-existing conditions.
Presently, the United State Government financially supplements some of the expenditure to the insurers for people of low income and those with pre-existing conditions and lower income. However, the reality is that premiums for the ACA are on the rise. Many of the policy holders are seeing a 200% increase this year in their monthly insurance premiums which has made it unaffordable for many middle class insured people under Obamacare.
Individual Mandate Fees And Changes
In December of 2017, the Individual Mandate was repealed and starting in 2019, people will no longer be mandated to carry private health insurance or be penalized for the 2019 tax year. Presently, the mandate for the 2017 tax year is calculated on how many months each person in the household had health insurance or failed to have insurance. It is based on 2.5% of the household income or a total of $695.00 per adult or $347.50 per child under the age of 18. The maximum penalty is $2,085 per household. The fee is charged either on a per person basis or as a percentage but not both.
For people who fail to keep their health insurance coverage during the year must file their taxes and include the Obamacare tax form as part of their tax filing forms. Taxpayers only owe an Individual Mandate Fee for the months they did not carry the proper health care coverage. The Individual Mandate Tax Fee is part of a person’s tax liability and once the Obamacare tax form is filed, the amount due will be taken out of any tax refund or be billed to the taxpayer in the form of IRS taxes. There are some cases where people can qualify for a health care coverage exemption. Those who qualify for an exemption for the tax year 2017 liability will not be assessed any fees or fines.