While Congressional Republicans were unable to muster the required majorities to pass several versions of House and Senate health care replacement bills, they were able to include a provision to repeal the individual mandate (i.e. the Obamacare penalty) via successfully passing their GOP tax reform bill to support President Trump’s tax reform agenda.
While the Obamacare penalty will still apply for 2017 and 2018 tax filings per the table below, for 2019 the Affordable Care Act (ACA) individual mandate provision requiring every eligible American to obtain health insurance or pay financial penalty when filing taxes has been permanently scrapped.
|Year||Penalty (Single)||Penalty (Family)||Maximum Penalty|
|2019||No penalty||No penalty||No penalty|
|2018||$695 or 2.5% of income||$2,085 or 2.5% of income||$13,100|
|2017||$695 or 2.5% of income||$2,085 or 2.5% of income||$13,100|
|2016||$695 or 2.5% of income||$2,085 or 2.5% of income||$13,000|
|2015||$325 or 2% of income||$975 or 2% of income||$12,500|
|2014||$95 or 1% of income||$285 or 1% of income||$9,800|
The individual mandate repeal does not mean that Obamacare or the broader ACA is dead – health insurance marketplaces and provisions like coverage for children under 26 are still in place. But it does deal a massive blow to the long term sustainability of ACA as it was based on ensuring enough healthy people buying health insurance (hence the penalty) to offset costs for providing subsidizing insurance to those who could not afford or were ineligible for employer sponsored insurance.
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3 thoughts on “Obamacare Penalty or ACA Individual Mandate Repealed and Scrapped from 2019 – But Still Applies in 2017 and 2018”
Not to mention, a good number of the plans that are affordable (because of premium subsidies) have very large deductibles. For many, the large deductibles are the equivalent of not having insurance at all since so much of their health care has to come out of their own pocket before they even begin to receive any coverage. It doesn’t matter if the premium subsidies increase along with the premiums if the deductibles also continue to increase. Both parties need to work together to fix the broken ACA system. This bi-partisan crap (voting against anything and everything that Trump wants) may make the Dems feel good about sticking it to Trump, but they’re only hurting their constituents in the long run.
The lack of a penalty will lead many younger people to drop their insurance since they only bought the insurance in the first place to avoid the penalty. With them leaving the insurance pool, premiums will eventually get too high for most folks to afford, even with their premium subsidies. The insurance companies will raise the premiums to astronomical levels if that’s what it takes to keep their greedy profit levels in check.
Still trying to figure out how this will actually “deal a massive blow to the long term sustainability of ACA” since, as we saw with the elimination of the CSRs, many insurers in a number of states (like here in Ohio) opted to simply raise premiums in order to lock in their profits for 2018. (Insurers in states who did not raise premiums to offset the elimination of CSRs will surely do so next year.) And since the premium tax credits (subsidies) automatically increase with the premium increases, people qualifying for subsidies will feel little of the increases. If, as an example, premiums increase by 10% due to not enough healthy people buying health insurance, the subsidies will increase as well.
Unless some other factor comes into play, as long as insurers have a way to lock-in their profits, I don’t see any of what’s happened so far impacting those who qualify for subsidized ACA coverage.