Was the Individual Mandate Eliminated?

One of the more controversial aspects of the Affordable Care Act was the individual mandate.  The law required everyone to buy health insurance or pay a penalty to the government come tax time.  Some thought it was wrong for the government to force people to buy something they might not want; and others said if people weren’t required to buy health insurance then only sick people would buy insurance and health insurance would quickly become unaffordable.  The Tax Cuts and Jobs Act was said to have eliminated the individual mandate.  Some people are very happy about the mandate going away while others think it is a terrible idea.  This blog is not here to debate that point.  The question this blog is focused on is, was the individual mandate actually eliminated?

Because the Supreme Court determined that the individual mandate was a tax, Congress could address the amount of that tax in a piece of tax legislation even without touching any other aspects of the Affordable Care Act; and that is exactly what congress did in the Tax Cuts and Jobs Acts.  The law did not eliminate the individual mandate, instead it set the tax rate for not having insurance to zero.  What is the difference between eliminating the individual mandate and setting the amount to zero?  To someone not having insurance, the answer is not much, but to any other organization having to comply with the Affordable Care Act the answer is a lot.

For example, large employers must still provide insurance to their employees or face fines and penalties even though the employees no longer face a payment for not having insurance.  In fact, employers must still provide all the reporting to employees they were required to provide before the individual mandate rate was set to zero.  For example, the 1095-C form is still required to be sent to all employees.  That means everyone will still be getting their documentation that they have insurance through their employer even though there is no payment due for not having such documentation.  This means business and organizations will still be incurring a lot of cost to comply with reporting requirements around the individual mandate even though everyone is reporting that that individual mandate has been “repealed.”

So they next time you hear someone say the individual mandate has been eliminated, maybe you can have a little fun with them by pointing out it hasn’t been eliminated, only set to zero.


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