The IRS has issued a set of Qs&As explaining the Individual Shared Responsibility provisions of the ACA after the elimination of the individual shared responsibility penalty.
Background. Initially the ACA’s individual shared responsibility provisions required most individuals to obtain “minimum essential health insurance” coverage for themselves, and any dependents, or pay a penalty. Through tax year 2018, taxpayers were also required to report health care coverage and whether they qualify for an exemption from coverage, and make a “shared responsibility payment” for months without coverage, or without a coverage exemption.
IRS Qs&As. As the IRS explains, the Tax Cuts and Jobs Act (“TCJA”) reduced the shared responsibility payment penalty to zero for tax year 2019 and all subsequent years. Nevertheless, despite the lack of a penalty, taxpayers are still legally required by the ACA to have “minimum essential coverage” or qualify for a coverage exemption. However, under the TCJA, they need not pay a shared responsibility penalty or file Form 8965 (to claim an exemption) with their Form 1040 even if they don’t have minimum essential coverage or an exemption for part or all of 2019.
If taxpayers owe a shared responsibility payment for tax years before 2019, the IRS may still offset that liability from any tax refund that may be due to them.
Additionally, the Qs&As:
- define minimum essential coverage;
- explain how an individual can determine if their plan meets the minimum essential coverage requirements;
- explain who is subject to the minimum essential coverage requirements; and
- provide a list of statutory exemptions from the general coverage requirement rules.
These Qs&As are written in relatively understandable terms and may be distributed to employees who wish to learn about their current obligations under the ACA.
The Qs&As are available at:
NOTE: The U.S. Court of Appeals for the Fifth Circuit has declared that the ACA’s individual mandate is unconstitutional. We will be covering this decision in a future Alert.