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Individual Mandate Exemptions Available for 2017 Tax Returns

Affordability, Tax Filing Threshold, and Other Exemptions Available

Under the Affordable Care Act’s (ACA) ”individual mandate” (also called individual shared responsibility) provision, every individual must have minimum essential health coverage for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return for tax year 2017.

Among other exemptions, individuals may claim the following exemptions from the individual mandate by filing Form 8965Health Coverage Exemptions, along with his or her 2017 tax return:

  • Affordability Exemption: The lowest-priced coverage available to the individual, through either a Health Insurance Marketplace or employer-based group health plan, would have cost the individual more than 8.16% of his or her household income for plan years beginning in 2017, as computed on the tax return.
  • Tax Filing Threshold Exemption: The individual’s gross income or household income was less than the applicable minimum threshold for filing a tax return (see ”2017 Federal Tax Filing Requirement Thresholds”).
  • Short Coverage Gap Exemption: The individual went without coverage for less than three consecutive months during the year.
  • Medicaid Expansion Exemption: The individual’s household income is below 138% of the federal poverty line for his or her family size, and at any time during the year, the individual resided in a state that did not participate in the Medicaid expansion under the ACA. States that did not expand Medicaid for all of 2017 include: Alabama, Florida, Georgia, Idaho, Kansas, Maine, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming.

Click here to learn more about individual mandate exemptions.

Be sure to visit our Individual Mandate (Individual Shared Responsibility) section for additional details.

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Deadline to File Paper Returns With IRS was February 28

Employers subject to the Affordable Care Act’s (ACA) information reporting requirements are reminded that the deadline to electronically file ACA information returns with the IRS is April 2.

The reporting deadlines in 2018 are for the 2017 calendar year, and are as follows:

  • Applicable large employers (ALEs)—generally those with 50 or more full-time employees, including full-time equivalents—must electronically file Forms 1094-C and 1095-C with the IRS no later than April 2. The deadline to file paper returns was February 28.
  • Self-insuring employers that are not considered ALEs, and other parties that provide minimum essential health coverage, must electronically file Forms 1094-B and 1095-B with the IRS no later than April 2. The deadline to file paper returns was February 28.

Note: Employers filing 250 or more Forms 1095-B or 1095-C are required to electronically file them with the IRS.

Additional information on electronic filing can be found on the IRS’s ACA Information Returns (AIR) Program webpage.

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‘Cadillac Tax’ Delayed Until 2022

Tax Previously Set to Become Effective in 2020

President Trump has signed the Extension of Continuing Appropriations Act, which (among other things) delays implementation of the “Cadillac Tax,” the Affordable Care Act’s excise tax on high-cost employer-sponsored health coverage, until 2022. Previously, this tax—which would impose a 40% tax on plans that cost more than $10,200 (for self-only coverage) and $27,500 (for family coverage)—was set to become effective in 2020.

Please visit our Cadillac Tax page for more information.

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Reminder: Individual Mandate Remains in Effect for 2018

Requirement is Effectively Repealed Beginning in 2019

Individuals are reminded that the section of the Tax Cuts and Jobs Act which effectively repealed the individual shared responsibility provision (“individual mandate”) of the Affordable Care Act does not become effective until 2019. As a result, individuals are required to have minimum essential health coverage, qualify for an exemption from the requirement, or pay a penalty tax for 2018.

Our Individual Mandate (Individual Shared Responsibility) section provides additional information on the individual mandate.

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IRS Will Not Accept Forms 1040 That Omit Health Coverage Information

IRS Issues Guidance for Taxpayers on Reporting Health Coverage

The IRS has announced that the upcoming 2018 filing season will be the first time that it will not accept electronically filed tax returns until taxpayers report their health care coverage pursuant to the individual shared responsibility provision (“individual mandate”) of the Affordable Care Act. In addition, returns filed on paper that do not address these requirements may be suspended pending the receipt of additional information, and any refunds may be delayed.

Background

The “individual mandate” (also known as individual shared responsibility) generally requires every individual to have minimum essential health coverage for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return. More detailed information about the individual mandate is available in IRS Q&As.

IRS Instructions

‎To avoid refund and processing delays when filing 2017 tax returns in 2018, the IRS is instructing taxpayers to indicate on their Forms 1040, U.S. Individual Income Tax Return, whether they (and everyone on their return):

  • Had minimum essential health coverage;
  • Qualified for an exemption from the coverage requirement; or
  • Are making a payment.

Click here to read the IRS guidance in its entirety.

Our Individual Mandate section features additional information regarding the individual shared responsibility requirements.