The Affordable Care Act has been debated since its inception, and now Trump’s executive order may have affected how you report your coverage on your tax return. The executive order gave the Department of Health and Human Services the authority to roll back certain aspects of the ACA. It appears that what this means for the IRS is that they will be softening enforcement of the individual mandate.
As it stands, the ACA requires that taxpayers demonstrate they have essential minimum coverage, whether that is through Medicare, Medicaid, VA health coverage, private insurance, or another form. Over 100 million taxpayers will report one of these, while others must file for a waiver or exemption, which in large part will be based on hardship, or they will face a penalty. This penalty is 2.5% of your adjusted gross income, or $695 per adult and $347.50 per child, whichever is higher. The penalty is payable by April 18th.
Taxpayers claim health insurance coverage by checking the box on line 61 of tax returns. If this box was not ticked in past years, the IRS would hold off on processing. This year, the IRS has suggested that it will process returns regardless of whether you check the box on line 61 or not. They may still contact you with questions, but your refund will not be withheld. Although this may be a relief for some, there will certainly still be some tax software systems and tax professionals that will insist on checking the box.
The executive order did not make any changes to the ACA, as changes can only be made through Congress, but it may be an indication on the rollbacks ahead. For now, expect some confusion and ambiguities. We always recommend transparency with reporting, and consulting your tax preparer on your options.
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