Finance News & Insights

Is the ACA individual mandate really dead?

When the Tax Cuts and Jobs Act (TCJA) killed the penalty on the ACA’s individual mandate, most employers believed Obamacare was effectively dead. But some states didn’t think killing the mandate was such a great idea and put forward legislation to keep the mandate alive on the state level. 

As HR pros are well aware, the ACA’s individual mandate reguired people to carry health insurance or pay a penalty.

However, beginning in 2019, individuals will no longer be required under the federal law to maintain health insurance because of the TCJA. It’s a move that experts believe will cause volatility in the group health plan market.

Unfortunately for employers, the reporting requirements under the ACA are still in place — despite the repeal.

NJ, VT and Washington DC

Since the TCJA took effect, two states, New Jersey and Vermont, and DC passed bills to include their own individual mandate. NJ, VT and Washington, DC join Massachusetts, which had an individual mandate in place well before the ACA became law (2006). Of NJ, VT and DC, the Garden State is the locale with the most specific details on how the penalties will be assessed/calculated. Under the law, which takes effect January 2019, NJ residents without minimum essential health coverage will pay a fine equal to 2.5% of their household income or $695 per adult and $347 per child, whichever is greater.

If the fine is based on a per-person charge, the max household/family penalty will be $2,085.

Even if you don’t have employees in these locations, you should keep an eye on this trend.

Several other states have expressed interest in such a law. In fact, right after the TCJA was passed as many as nine states were strongly considering state-level individual mandate legislation. So there’s a very good possibility the three recently passed state laws will not be the only ones we see moving forward.

We’ll keep you posted.

This post was originally published on our sister site, HR Morning.

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