The Affordable Care Act (ACA) better known as Obamacare got overturned last week as a majority of Republicans passed a new measure. Obamacare was intended as a way for all Americans to have health insurance; but it quickly become controversial and unpopular, not to mention top heavy. Any successful insurance pool needs a massive number of healthy to offset the numbers of sick and Obamacare never had them.
Senate Republicans are divided on the type of replacement to work up. Any 2017 federal tax cuts or increased spending will have to wait until a plan for health care is on the books. The main point of contention is one of scale, how much of the original law gets scrapped and how much stays in the final version?
Currently the penalties for not having insurance in 2016 are assessed in 2 different ways:
- Flat fee of $695 for Adults and $347.50 per child under 18 (max $2085)
- 2.5% of household income
Some exemptions do apply. Economic hardship and income related conditions are the most common. Being without coverage for less than 2 months also qualifies. Any questions about exemptions to the law, use Form 8965.
The House version of the new bill adds an extra $8 billion as a backstop for those with ‘pre-existing’ conditions. Both parties have agreed to do something to take care of them. The pre-existing coverage requirement of Obamacare was the most popular part and the portion likely to stay in the final version in some form.
Everyone hates fines and penalties especially after filing taxes. For that reason any prior Obamacare penalty for not holding coverage will likely disappear in the final framework. The recent passage of the bill in the House represents the first phase toward crafting a new health law.
Income tax questions? Want to know how the current law affects you?
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