{"id":12508,"date":"2018-06-14T08:00:14","date_gmt":"2018-06-14T13:00:14","guid":{"rendered":"http:\/\/taxprocenter.proconnect.intuit.com\/?p=12508"},"modified":"2019-08-09T15:04:20","modified_gmt":"2019-08-09T20:04:20","slug":"what-does-the-affordable-care-act-have-to-do-with-tax-reform","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/what-does-the-affordable-care-act-have-to-do-with-tax-reform\/","title":{"rendered":"What Does the Affordable Care Act Have to do With Tax Reform?"},"content":{"rendered":"

The Tax Cuts and Jobs Act<\/a>\u00a0is the largest piece of tax reform legislation in 30 years and was signed into law Dec. 22, 2017. Although most of the legislation applies to tax year 2018, clients are already asking their tax practitioners questions about the impact to their tax situation. Tax professionals are viewing this sweeping tax reform as both a\u00a0challenge and opportunity<\/a> for their tax practices. The following article focuses on aspects of the Affordable Care Act (ACA) included in the Tax Cuts and Jobs Act.<\/p>\n

Affordable Care Act Mandate Eliminated in 2019<\/strong><\/p>\n

In 2009, the tax law and healthcare fields began to intersect quite a bit under the ACA, and tax professionals needed to get up to speed quickly on the related tax changes.\u00a0Now, we\u2019re seeing a very large component of ACA going away.\u00a0Beginning in 2019\u00a0(not 2018), individuals won’t have to pay a federal penalty for not being covered by insurance or by an exemption.\u00a0Please note that some states already enforce a penalty for not having insurance, and this does not change.<\/p>\n

Under existing law, individual taxpayers who do not have minimum essential health coverage or qualify for an exemption are required to pay a penalty (shared responsibility payment) on their tax return. For tax years 2016, 2017 and 2018, the penalty is the greater of $695 per individual ($2,085 maximum) or 2.5 percent of household income minus the filing threshold.<\/p>\n

Under tax reform, and beginning in 2019, the individual shared responsibility payment is permanently reduced to zero going forward.\u00a0Taxpayers will continue to receive Forms 1095-A, 1095-B and 1095-C with information about their coverage, and they should keep these forms with their records.\u00a0Taxpayers who purchase insurance coverage through the Health Insurance Marketplace<\/a>\u00a0will continue to receive Form 1095-A because information included on the form is necessary to properly calculate the Premium Tax Credit on their tax return.<\/p>\n

Itemized Deduction for Medical Expenses More Beneficial<\/strong><\/p>\n

The Tax Cuts and Jobs Act reinstated the lower 7.5 percent (down from 10 percent) of adjusted gross income threshold for regular tax and alternative minimum tax (AMT) purposes to\u00a0tax years 2017 and 2018.\u00a0This can translate into a higher deduction for taxpayers. Beginning in 2019, medical expenses will be subject to the elevated 10 percent floor for regular tax and AMT.\u00a0<\/strong><\/p>\n

Elements of the Affordable Care Act Not Changing<\/strong><\/p>\n

This list includes the following:<\/p>\n