As promised, week by week, we will be taking a closer look at all the components of the new tax reform bill. This week’s topic deals with the Affordable Care Act (you may also know it as the “ACA” or “Obamacare”). Let’s talk details.

First of all, what is the ACA? Championed by the Obama administration, the ACA was passed in March of 2010. The health insurancepurpose of the bill was to lower the overall cost of healthcare for the federal government by requiring all US citizens to maintain health insurance coverage. The thought behind mandating health coverage was that preventative health care would reduce the occurrence, and therefore the price, of emergency health care. Those who were already covered or had the option to be covered under an employer-sponsored health plan weren’t really affected. Many small businesses and individuals who were not offered healthcare through their work were faced with a decision – purchase health care or pay a penalty. Because the bill was “phased in” over the course of 4 years, the initial penalties weren’t that bad. During that time frame, many people opted to pay the penalty instead of carrying insurance since the cost of the penalty was less than the cost the insurance would be.

However, by 2016 when the law was in full swing, the penalty for not carrying insurance carried a pretty hefty price tag – $695 per adult, $347.50 per child, with a cap of $2,085 per family. Businesses were also faced with the same dilemma for not carrying health insurance coverage. For businesses with more than 50 employees, businesses would be penalized $2,000 for each employee after the first 30. This tax still applied if even one employee in the company could find comparable benefits at a lower cost on a health care exchange.

The individual penalties were maintained for 2017. Therefore, when filing your 2017 taxes in the upcoming months, you’re going to want to make sure that you have all of the necessary paperwork to prove that you maintained health coverage throughout the year last year. This proof comes in the form of a form 1095 – A, B, or C. These forms may not have arrived yet, but they will be coming soon! Keep an eye out for them!

Everyone has talked about the repeal of the ACA under the new tax reform. The ACA itself has NOT been repealed. However, the individual coverage mandate HAS been. This means that the penalty for not maintaining health insurance coverage for you and your family will disappear come 2019. The ACA itself is still in effect. The Trump administration has expressed its desire to dismantle the bill completely; however, they have not yet been able to accomplish this arduous task.

tax papersIn the coming weeks, we will dig into all the details of the new tax reform legislation. Just stay tuned! If you are ready to file your taxes or have some questions and need some guidance, our staff can help! Call our office today to schedule your free consultation. Remember, to have your taxes filed prior to the April 18th deadline, make sure to have all of your tax documents to our office no later than March 31. If not, we’ll have to file an extension.

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Amadeo, Kimberly. “2010 Patient Protection & Affordable Care Act Summary.” The Balance, 15 Sept. 2017, www.thebalance.com/2010-patient-protection-affordable-care-act-3306063.