On January 20th president Trump signed an executive order, permitting the Department of Health and Human Services to withdraw and repeal certain features of the Affordable Care Act (Obamacare). Prior to this executive order, law under the ACA and the IRS required taxpayers to demonstrate “essential minimum coverage (MEC).” Taxpayers are considered to have MEC if they have health insurance via: Medicaid, Medicare, CHIP, retiree coverage, TRICARE, VA health coverage, or private health insurance purchased from the individual, small group or large group market place. Taxpayers on COBRA or state continuation may also qualify for MEC depending on their plan type.
Taxpayers who do not have MEC are subject to a waiver of exemption or a penalty. This penalty is referred to as the “shared individual responsibility payment.” In 2016, the shared individual responsibility payment for anyone who does not have MEC is 2.5% of your adjusted gross income, or $695 per adult and $347.50 per child, up to a maximum of $2,085, whichever is greater. In 2015, taxpayers without MEC had to pay $325 per adult and $162.50 per child up to $975 per family, or 2% of your household income, whichever was greater.
Results for 2015 aren’t currently available, however in 2014, 7.5 million Americans paid shared individual responsibility payments to the IRS for a total of $1.5 billion in penalties.
Here is the good news, the IRS has recently announced, “Individuals do not have to wait for their Form 1095-B or 1095-C in order to file. While the information on these forms may assist in preparing a return (tax return) they are not required. Like last year (2015), taxpayers can prepare and file their returns using other information about their health insurance.”
The quickest and easiest way for tax payers to indicate that they have coverage is to complete the box on line 61 on page 2 of their individual income tax return:
In 2017, the IRS has said that it will accept and process tax returned even if a taxpayer is silent on coverage. This means that tax payers filing for their tax returned are not obligated to specify their healthcare coverage.
To be clear, this does not mean that tax payers should leave this question on their tax return blank. If possible it is always recommended to complete any IRS document truthfully and to the best of your ability.