Tax bill may change your client’s health-care costs
Pay attention to new rules for the "individual mandate" requirement and the medical expense deduction floor
Dec 29, 2017 @ 10:45 am
The newly signed Tax Cuts and Jobs Act will affect how much your clients pay out of pocket on health care, in several ways. The effects will be both short term and medium term:
- The "Individual Mandate" will be eliminated by Jan. 1, 2019.
- There is a temporary reduction in the medical expense deduction floor, from 10% to 7.5% for 2017 and 2018.
The Individual Mandate is eliminated by Jan. 1, 2019. Regardless, the Individual Mandate requirement is in effect for 2017 and 2018. During that time, all taxpayers, other than those who are exempt from the health insurance requirement, must have minimum essential health insurance coverage.
Folks who do not maintain that type of coverage are obligated to pay the "shared responsibility payment," otherwise known as the penalty. The 2017 "shared responsibility payment" is 2.5% of yearly household income or $695 per uncovered person, whichever is higher.
That penalty is figured into the 2017 tax return. Healthcare.gov has more detailed penalty information. The Kaiser Foundation's online calculator is helpful to estimate "shared responsibility payment" amounts. Read more