Year Five of Obamacare: What You Need to Know in 2018

Here’s what you need to know about the Affordable Care Act (ACA) in 2018, including the tax penalties for failure to enroll.

The repeated efforts by Congress to repeal and replace the Affordable Care Act (ACA), also popularly known as Obamacare, failed. However, Congress was able to get another shot at changing Obamacare through the Tax Cuts and Jobs Act, passed at the end of 2017. The new tax law, however, does not repeal Obamacare. The only provision of Obamacare that will be repealed under the Tax Cuts and Jobs Act is the individual mandate and that doesn't occur until 2019. All other provisions of Obamacare remain in place. See How Does the Tax Cuts and Jobs Act Affect Obamacare? for more information.

Here’s what you need to know about obtaining or continuing your health insurance coverage under Obamacare, or the tax penalties you will face for failure to enroll for 2018.

Coverage In 2018

If you obtained individual health coverage by enrolling through the federal healthcare exchange (healthcare.gov) or a state exchange for 2017, you must renew your coverage for 2018 or choose new coverage. You should receive a letter from your current insurer outlining the 2018 coverage it is offering and its price. If you do nothing, the policy you had during 2018 will be automatically renewed, likely with a higher premium. According to the Health and Human Services Department Center for Medicare and Medicaid Services, this year the automatic re-enrollment will take place starting Dec. 16, the day after the open enrollment season ends in most states. If you miss this deadline, you won’t be able to make any changes in your health coverage for 2018 unless you have a life change like loss of a job or you move to another state.

Additionally, if you received a subsidy (officially called the premium tax credit) to help you pay for your coverage in 2017 you should determine if your subsidy should remain the same for 2018, or if it should be increased because either the price of your coverage has gone up, your income for 2018 will be lower than in 2017, or you have more people to cover. You can do so through your health insurance exchange.

If you didn’t receive a subsidy in 2017, you could be entitled to one for 2018 if your income will be lower in 2018, your family is larger, or your premiums have gone up. Again, you must check your health exchange.

If You are Enrolling for the First Time

Ordinarily, you may obtain Obamacare health coverage through your health insurance exchange only during the annual open enrollment period. You are not required to purchase your insurance through your state health insurance exchange—for example, you are free to do so directly from an insurer. However, you can only obtain Obamacare’s health insurance premium subsidies if you obtain your insurance through your state exchange. The open enrollment period is the same whether you enroll through your state exchange or outside it.

For 2018 coverage, in most states the open enrollment period runs from November 1, 2017 through December 15, 2017. This is much shorter than in prior years. However, the open enrollment period is longer in the following states:

  • California – Nov. 1, 2017 to Jan. 31, 2018
  • Colorado – Nov. 1, 2017 to Jan. 12, 2018
  • District of Columbia – Nov. 1, 2017 to Jan. 31, 2018
  • Massachusetts – Nov. 1 to Jan. 31, 2018
  • Minnesota – Nov. 1, 2017 to Jan. 14, 2018
  • Washington – Nov. 1, 2017 to Jan. 15, 2018

After the open enrollment period ends, you can still obtain coverage if you have a life change—for example, you move to another state, lose your health insurance, get married or divorced, or have a baby. In this event, you qualify for a special enrollment period during which time you may apply for coverage. You can also get Obamacare coverage anytime you qualify for Medicaid in your state. For details, see the online questionnaire at www.healthcare.gov/screener/.

Tax Penalties for Uninsured for 2018

Individuals who are not exempt from Obamacare’s coverage requirement are subject to a tax penalty if they don’t obtain minimally adequate health coverage for themselves and their families. You may be exempt from the penalty if any of the following apply to you:

  • you cannot afford coverage
  • obtaining coverage would result in certain hardships for you
  • you are not a U.S. citizen, U.S. national, or an alien lawfully residing in the U.S.
  • you don’t have to file a tax return for 2018 because your income is below the tax filing threshold ($10,650 for individuals and $21,300 for a couple filing jointly)
  • you are unable to qualify for Medicaid because your state has chosen not to expand the program
  • you participate in a health care sharing ministry or are a member of a recognized religious sect with objections to health insurance
  • you are a member of a federally recognized Indian tribe, or
  • you are in prison.

If you’re not exempt, the penalty kicks in if you have no health insurance for more than three months during the year. For the vast majority of taxpayers, the tax penalty for 2018 is $695 per uncovered adult $347.50 per child under 18, up to a maximum of $2,085 per family. Higher income taxpayers have to pay a penalty equal to 2.5% of their household income if this is more than the flat amount penalty. However, this percentage penalty may not exceed the national average cost of a bronze-level health plan.

The penalty is prorated if you had coverage for part of the year. No penalty is due if you lacked insurance for less than three months. For more details on calculating the penalty, see the IRS Individual Shared Responsibility Provision – Reporting and Calculating the Payment page.

For more information on the ACA and links to all the state exchanges, visit Healthcare.gov.

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