The ever-politicized Patient Protection and Affordable Care Act (PPACA) branded “Obamacare” by those who never liked it was modified under Congressional budget rules in the Tax Cuts and Jobs Act the president signed into law last week. While actually modifying the provisions of the PPACA wasn’t possible in the parliamentary chicanery of the budget law, Congress did provide for changing the penalty calculations as they do have revenue effects. The two ways to calculate the penalty, which remains a “greater of the two” penalty, had their rates changed from 2.5 percent to zero percent of “household income in excess of the return filing threshold,” with a minimum that changed from $695 to $0. A creative approach, no? Leave the penalty in place, but reduce it to $0.
An aspect that may take some by surprise, however, is that the rate reduction does not take place until after 12/31/2018. So, dear clients, please make sure you have some kind of coverage to avoid what will be a painful fine for those without coverage.
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One Reply to “Obamacare (AKA, the PPACA) and Shared Responsibility Payments”
Note that the rates do not change to zero until 12/31/2018. Put another way, this change takes effect in 2019 for tax returns that will be filed in 2020.