There are a lot of really good reasons to purchase health insurance:

  • Under the Affordable Care Act’s guaranteed issue provision, people cannot be turned down or charged more for pre-existing medical conditions. That means that someone who already has a need for medical care can buy health coverage to help them pay the bills; there’s not even a waiting period.
  • For those without pre-existing conditions, there’s certainly no guarantee they’ll be healthy forever. Nobody can predict what might happen in the future, and that, really, is why people buy insurance.
  • For people who qualify, the government will even help pay the monthly health insurance premiums and out-of-pocket medical costs. The ACA’s premium tax credits and cost sharing subsidies have helped millions of people obtain health coverage and pay their medical bills.

One final reason to purchase health insurance, though—that you’re required to have minimum essential coverage or face a tax penalty under the ACA’s individual shared responsibility requirement—could soon be eliminated. At least that’s what we’re hearing from Republican lawmakers who are trying to repeal the Affordable Care Act and replace it with their own version of health reform.

“Repeal and Replace”

Ultimately, whether the individual mandate and the associated penalty remains intact or goes away depends on what Republicans in the Senate decide to do. The American Health Care Act, which passed the House of Representatives in early May, would not eliminate the individual mandate but rather would reduce the penalty to $0 effective immediately.

The mandate would eventually be replaced by a “continuous coverage incentive” that would provide for a 30% surcharge for late enrollees in the individual market. Basically, anyone with a coverage gap of 63 days or more in the previous 12 months would pay 30% more for the next 12 months, giving individuals an incentive to purchase and maintain health insurance.

The Senate is still working on its version of the bill, and while there were multiple reports that they were going to start over from scratch, we really don’t know what the bill will look like since it’s being crafted in private, hidden from the public and even from Democratic lawmakers. As the New York Times puts it, “they are coming up with the legislation behind closed doors without holding hearings, without consulting lawmakers who disagree with them and without engaging in any meaningful public debate.”

Whatever emerges out of the Senate, we still don’t know what, if anything, will end up happening. In the end, the House and Senate must agree and vote on a single version of the bill to send to the President’s desk, and right now there’s still a lot of disagreement. Top that with the fact that President Trump is now saying that the House version of the bill is “mean,” and we really don’t know what to expect.

Will the Mandate Be Enforced?

In the meantime, we do know that enforcing the individual mandate has not been a huge priority for the current administration. In fact, earlier this year federal regulators announced that the IRS is accepting tax returns that don’t answer the question about health coverage; returns that leave the question blank are not automatically rejected as they would have been under the previous administration’s rules.

That doesn’t mean, however, that people without minimum essential coverage don’t owe the shared responsibility penalties. The ACA is still the law and the individual mandate is still in force. To what degree the IRS will pursue these individuals, though, is still unknown.

The Fallout

The uncertainty around the administration’s enforcement of the individual mandate, payment of the cost-sharing subsidies, repeal efforts, and more has created concerns for health carriers who still don’t know what to expect in 2018. Insurance is a game of calculated risks, and all of the uncertainty is making it much more difficult for insurers to do the math. If we don’t get some answers soon, we’ll likely see more carriers deciding not to offer Marketplace plans next year. And that, of course, will definitely impact where you should focus your efforts this fall.