The GOP’s new tax bill was signed into law by President Trump today, with a few key changes including new tax brackets, a deduction increase, and possibly the biggest news—the repeal of the individual mandate. After a year of proposed healthcare changes, attempted repeals, dramatic headlines and off-the-cuff tweets, you may be wondering what the repeal of the individual mandate will really mean for you and your healthcare coverage. We get it, it's confusing. Here's what you need to know.
What is the Individual Mandate?
Here’s a refresher course. The individual mandate went into effect January of 2014, requiring individuals to purchase health insurance if financially able. If you don’t purchase any, you may have to pay a fee called the individual shared responsibility payment. That means you would pay $695 per adult or 2.5% of household income, whichever is higher. The purpose of this mandate is to ensure that people aren’t just buying health insurance when they are sick. The idea is that premiums go down when you widen the insurance risk pool to include healthy and young people, as well as the old and sick. So, now that the Trump administration has repealed this, what does that mean?
It's not gone...yet
The individual mandate will still be in effect for 2018, meaning you still must obtain insurance for the year. No one is off the hook yet. We will have to wait until 2019 to really assess the impact of this recent legislation. There are a few different safeguards in place that could stall or even completely prevent further congressional action. Obamacare’s marketplace insurances, federal subsidies that help Americans pay for their monthly premiums, and the Medicaid expansion, to name the biggest factors.
Who Does This New Bill Affect?
To be honest, repealing the individual mandate won’t affect most people. Most people receive insurance through employers or through public health programs, like Medicare or Medicaid. For those that don't, like if you are self-employed, there's the Obamacare individual marketplace, which will still exist even after the individual mandate is gone.
It will be interesting to see how the marketplace is affected once the individual mandate is no longer in effect. The Congressional Budget Office (CBO) predicts that the premiums in the marketplace may go up 10% without the individual mandate. Repealing the individual mandate could cause 13 million people to drop insurance by 2027, with healthy people opting out of insurance altogether and even sick individuals forgoing coverage due to lack of knowledge or high costs. Before we panic about this increase, let's remember that premiums have soared upwards of 200% or more in the past few years.
The good news is that for most of those who enroll through Obamacare (individuals making between 100% and 400% of the Federal Poverty level), an increase in federal subsidies should help to make up for the increase in premiums. The bad news is if you make above that line (individuals making over $48,000 and families making over $98,000), you will be facing the impact of that premium increase.
Take Command is here to help
If you don't receive your health insurance through an employer or through a public health program, it may be time to re-evaluate your options, especially in light of the repeal of the individual mandate. Take Command Health uses data and unbiased advice to help you find the most affordable plan based on your needs, your prescriptions and your doctors. What's more, we let you compare off- and on-exchange plans side by side along with other affordable alternatives to health insurance, like faith-based Medi-Share or short-term medical solutions.
Take Command Health is here to keep you informed. Click the button below if you want to be kept up to date on the latest.