From the Desk of Bob McNett…….
Mandate for Buying Health Insurance, or Paying a Penalty, Has Been Repealed
Nearly a decade after the Affordable Care Act was signed into law, the first signs of Republicans chipping away at the foundations of the law are appearing.
As part of the sweeping tax reform passed late last year, the individual mandate has been repealed. This mandate said that an individual must be covered on a plan consistent with the
ACA benefit requirements, or pay a penalty at tax time. The penalty currently is 2.5% of earned income.
Beginning in 2019,, this mandate and penalty will go away. The mandate and associated penalties will stay in force for 2018.
The individual mandate is one of the lynchpins of the Obamacare law. The idea was to attract younger, healthier individuals to the risk pool by penalizing them for non-participation. The actual results in attracting these young indestructibles since the mandate was instituted have been mixed, the success or lack thereof depending on the political philosophy of the commentator.
The non-partisan Congressional Budget Office (CBO) has predicted that, as a result of the mandate repeal, some 4 million people will forgo buying insurance in 2019, and some 13 million going uncovered by 2027.
There is no doubt that the mandate, along with premium subsidies, community rating and guaranteed issue, is part of the supporting foundation of the ACA. The repeal of the mandate takes away the only enforcement mechanism in the law, other than the employer mandate.
Since the 2017 Republican effort to repeal the entire law last year failed due to a few Republican Senatorial hold-outs, we may begin seeing the law attacked piecemeal, with various provisions of the law being taken on one at a time.
My own opinion is that we may next see on the Republican agenda an effort to repeal the employer mandate, which is the requirement that employers with 50 or more full-time equivalent (FTE) employees provide qualifying coverage at certain maximum costs to employees. Failure to do so, currently, can result in some major penalties on a non-complying employer.
The results of the mid term elections this year will be a big determinent of the future of the Affordable Care Act.
Robert K. McNett, LUTCF
The McNett Agency
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