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Don’t Forget About the Individual Mandate!

It’s now been a year since the 2016 presidential election and nearly ten months since inauguration day. By now, most of us expected major portions of the Affordable Care Act to be repealed and thought the individual mandate would be one of the first parts to go. That hasn’t happened, of course, which means that our clients are still required to purchase health insurance or face a penalty under the ACA’s shared responsibility provision.

In short, the individual mandate requires people to:

  • Have “minimum essential coverage” each month of the year (from a group or individual policy or from a government program like Medicare or Medicaid),
  • Qualify for one of the many available exemptions, OR
  • Make a shared responsibility payment when they file their taxes if they don’t’ have MEC

For brokers, the individual mandate is a great tool when visiting with clients and prospects during the annual open enrollment period. For those who aren’t quite sold on the value of the health plan, especially with the higher premiums and higher cost-sharing requirements, the individual mandate penalty might be enough to close the deal.

To help you illustrate just how much this penalty might be, the Taxpayer Advocate Service has developed an “Individual Shared Responsibility Provision – Payment Estimator.” It shows what people might have to pay if they don’t have minimum essential coverage and don’t qualify for a coverage exemption.

You can access the tool here: https://taxpayeradvocate.irs.gov/estimator/isrp/

Obviously, there are a lot of great reasons to purchase health insurance, and the individual mandate is just one of them. The premium tax credits and cost sharing reduction subsidies help make the coverage more affordable while reducing the out-of-pocket exposure for those who qualify; the guaranteed issue provisions allows people who otherwise might not qualify to purchase coverage for their pre-existing conditions; and even healthy people who don’t qualify for financial assistance still need health insurance because they never know when they may encounter an unexpected illness or injury. Still, the mandate has unquestionably been the motivation some people needed to purchase health insurance, and as long as it’s still the law you should consider using it as part of your sales presentation.

MEC Options

Metal plans are not the only options under the ACA. MEC plans, which provide the most basic provisions of minimum essential benefits, have become more popular for self-employed people choosing to forego the more expensive major medical plans while still complying with the individual mandate. MEC plans allow consumers to avoid the “tax penalty” with coverage for a range of preventive healthcare services like screenings and vaccinations. Adding a short term medical or fixed benefit plan along with a MEC plan, offers more health coverage, affordable protection and compliance with the ACA.

AHCP can get you registered to represent a qualified MEC plan for your self-employed clients whether they are self-employed, working for a small business or between jobs. For additional questions regarding broker registration contact us at 877-228-8773 or email us at Contracting@AHCPsales.com.

One more thing… We’ve written before about the fact that shortly after President Trump was sworn into office, in response to his executive order to “ease the financial burdens” of the Affordable Care Act, the Internal Revenue Service announced that it would continue accepting tax returns that fail to answer the question about health coverage. Insurers were critical of the decision, worrying that it could lead to adverse selection because some might conclude that the mandate will not be enforced and that there won’t be a penalty for going without coverage.

The IRS has now reversed that position for the 2018 filing season, saying in an October statement that “the IRS will not accept electronically filed tax returns…until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment. In addition, returns filed on paper that do not address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed.” When you tell your clients about the individual mandate during your sales presentations, you’ll definitely want to mention this new decision.

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