The Tax Cuts and Jobs Act changes the individual insurance mandate, the rules regarding the shared responsibility payment which has required individuals to obtain minimum essential health coverage or otherwise pay a penalty.
Current Law
Through December 31, 2018
Individuals and any of their dependents are required to obtain minimum essential health coverage for the month; otherwise they will pay a monthly shared responsibility payment (penalty). This is reported on Form 1040. Certain individuals may qualify for an exemption from the penalty. This tax law is in effect through December 31, 2018.
New Law
Effective for tax years beginning after December 31, 2018
The shared responsibility payment (penalty) is eliminated by reducing the percentage by which the excess of the taxpayer’s household income over the taxpayer’s applicable filing threshold is multiplied by zero and setting the applicable dollar amount to zero.
Commentary
The net result of these changes is that no shared responsibility payment (penalty) will be required after 2018, nor will there be any penalty imposed for failing to maintain minimum essential coverage. However, note that the 2017 Tax Cuts and Jobs Act does not appear to remove the employer mandate to provide health insurance to employees if the employer is an Applicable Large Employer (50 or more Full Time Equivalent Employees).
