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IRS Already Making Changes for 2017 to Relax ACA Rules

by Wendy Barnett

Trumps Executive Order regarding Obamacare Repealshutterstock_126809123

President Trump wasted no time in beginning his administration’s goals to repeal Obamacare. On inauguration day, he signed an executive order to begin steps to do so.  The directive states President Trump’s intention to seek the prompt repeal of the Affordable Care Act (ACA) and in the meantime proclaims its goals of minimizing the Act’s economic and regulatory burdens. It also aims to “prepare to afford the States more flexibility and control to create a more free and open healthcare market.” The executive order is a broad policy directive. It gives the Secretary of Health and Human Service and the heads of all other executive departments and agencies with authorities and responsibilities under the ACA authority and discretion available to them to reduce the above mentioned burdens to the State, individuals, families, healthcare providers, health insurers, and others.

To read the entire executive order, see: Minimizing the economic burden of the Patient Protection and Affordable Care Act pending repeal

IRS Relaxes Approach to the Mandate

Currently, the ACA law requires everyone to have qualifying health insurance; this is called the “Mandate”. In 2017, one way this law was going to be enforced was for the IRS to reject filer’s tax returns if they did not provide information related to this coverage. In response to President Trump’s executive order, the IRS has quietly made some changes that will affect 2017 tax filers. In short, tax filers will not be required to indicate if they had health insurance coverage for that year. Checking Box 61 on Federal Form 1040 will be voluntary, meaning tax returns can be submitted and processed without proving Minimum Essential Coverage health insurance was maintained.

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The IRS maintains that these changes will minimize burdens on taxpayers, including those expecting refunds. Never the less, they also state that the ACA law remains “in force until changed by Congress, and taxpayers remain required to follow the law and pay what they may owe‎.” So while the enforcement process will be more relaxed, the IRS still has the ability to follow up with those who elected to not indicate their coverage status. The IRS does not indicate what conditions will trigger a follow up for those who leave Box 61 blank.

For more information on the ACA and the IRS see: Individual Shared Responsibility Provision

What does this mean for tax payers?

So far, no legislative changes to the Health Care Reform law have taken place for 2017, so, the Mandate, the Tax Penalty, and the qualifiers for receiving a Tax Credit and for paying undeserved Tax Credits back are the same.  The relaxed approach that the IRS will take regarding the mandate on 2017 tax returns may mean that some uninsured tax payers may go unnoticed. Other changes in procedures may unfold during the year that could allow more exemptions for the Shared Responsibility Payment to be granted or more flexibility to be given to States to exercise healthcare programs. For now we advise the following:

  • Continue to maintain health insurance as the Mandate is still in force
  • If you maintained qualifying health insurance for the year, choose to check Box 61 and indicate “full-year coverage” on your 2017 Tax Return
  • If you are currently enrolled in a health benefit exchange and are receiving Advanced Premium Tax Credits (APTC), it is very important to report income changes – APTC is based on the income you indicated on your application and will have to be paid back if you projected your income too low
  • If you received APTC, make sure to file your 2017 taxes on time