ACA Individual Penalty Still Applicable for 2018

The Tax Cuts and Jobs Act did remove the individual penalty provision; however, it does not go into effect until 2019. Therefore, if an individual did not have health insurance for all or part of 2018 and did not qualify for an exemption they will owe a penalty on their 2018 federal return.

If it is determined that an individual does owe a penalty for 2018, it is calculated as the greater of: 

·         2.5% of the individual’s income that exceeds their 2018 filing threshold (standard deduction for their filing status)

Or

·         A flat dollar amount that is assessed for the taxpayer, spouse, and dependents as follows:

o    $695 for taxpayer, spouse, and dependents over age 18

o   $347.50.50 for each dependent under age 18

The maximum family flat dollar amount for 2018 is $2,085

See pages 16 – 20 of the draft 2018 Form 8965 instructions for more information on how the penalty is calculated.

Health Care Coverage Exemptions

Most individuals who did not have health insurance for all or part of 2018 probably qualified for an exemption. Therefore, it is important that before any penalty is calculated that an individual determines whether they may qualify for a health care coverage exemption.

If an individual qualifies for a health care coverage exemption they must complete the applicable parts of the 2018 Form 8965 (Health Coverage Exemptions) and include it with their 2018 federal return.

If an individual needs help in determining whether they qualify for an exemption, a Find Exemptions tool is available on the Healthcare.gov website.