Affordable Care Act Penalty 2018TY

Affordable Care Act

I am sure you’ve heard that President Trump repealed the penalty part of “ObamaCare” (aka Individual Shared Responsibility Payment), however, do you realize that it doesn’t actually take effect until your 2019 Tax Year? Under the Tax Cuts and Jobs Act (TCJA), taxpayers must continue to report coverage, qualify for an exemption, or pay the individual shared responsibility payment for tax year 2018.


How does this work you wonder? For 2018 TY the payment is 2.5% of your income above the filing threshold (which we discussed earlier) or a flat rate of $695 per adult family member, $347.50 per child family member or a Family Maximum of $2,085. You can see how this can decrease your refund or in many cases cause a payment due on your final return. Also, if you had coverage for any part of the year it will decrease the penalty. If you had Minimum Essential Coverage for a single day in the month, the whole month is covered. Also, there is 2-month gap that is allowed for an exemption.


The easiest way to avoid this penalty is by having Minimum Essential Coverage. This can include Medicaid and Medicare. Some healthcare insurances actually do not qualify as Minimum Essential Coverage (i.e. vision insurance). You should receive a form 1095B if your health insurance will qualify. You may receive a 1095C from your employer stating you were offered healthcare coverage and you chose not to take it. In this instance you may or may not qualify for an exemption.


The Affordable Care Act (ACA) also known as ObamaCare offered a Marketplace option. In this instance if you applied and did not purchase health insurance you may receive an Exemption Certificate Number (ECN). If you did receive insurance through the Marketplace and a Premium Tax Credit (PTC) to assist in paying the insurance premiums. In this instance you will receive a 1095A and may receive PTC on your return or if you underestimated your income for the year you may have to pay some of it back with your return.


Confused? Wondering what are exemptions to this? We can actually help. We are familiar with the forms required to be filed to qualify for an exemption. We understand what can reduce or eliminate your ACA penalty tax. There are addition tax forms that must be filed with your return to receive a refund or payment for your PTC or to qualify for an exemption from the penalty. Give us a call at (989) 859-0346 or email us at