Recent­ly, the Pres­i­dent signed a bill repeal­ing the Afford­able Care Act’s Indi­vid­ual Man­date (the tax penal­ty imposed on indi­vid­u­als who are not enrolled in health insur­ance). While some are prais­ing this action, there are oth­ers who are con­cerned with its after­math. So how does this affect you and why should you pay atten­tion to this change?

First, as an indi­vid­ual, if you do not car­ry health insur­ance, you are cur­rent­ly pay­ing a penal­ty of $695/adult not cov­ered and $347.50/uninsured child with penal­ties going even as high as $2085/household. These penal­ties have been the decid­ing fac­tor for most unin­sured Americans—go broke buy­ing insur­ance but they have insur­ance or go broke pay­ing a fine and still be unin­sured. With the repeal signed in Decem­ber 2017, these penal­ties are zeroed out start­ing Jan­u­ary 1, 2019.  While it seems that the repeal of the tax penal­ty should be good news all around, it does have some ram­i­fi­ca­tions. With­out reform in the health­care are­na for bal­anced pric­ing, when indi­vid­u­als make a mass exo­dus in 2019, we can expect high­er pre­mi­ums to account for the loss of insured customers.

As a busi­ness, you are still under the Employ­er Man­date of the ACA. There have been no changes to the cov­er­age guide­lines and report­ing require­ments of this Act. How­ev­er, with healthy peo­ple opt-ing out of health insur­ance cov­er­age, the employ­er pre­mi­ums can expect to be raised to cov­er the increased expens­es of the sick. Some do pre­dict the pos­si­bil­i­ty of the repeal of some parts of the Employ­er Man­date —specif­i­cal­ly PCORI fees and employ­ment report­ing. The Indi­vid­ual and Employ­er Man­dates were cre­at­ed to com­pli­ment each oth­er and so changes to one tend to mean changes to the other.

So, why should you pay atten­tion to this change? Because the bal­ance the ACA Indi­vid­ual Man­date was designed to help make in the health insur­ance mar­ket­place is now unbalanced.

Tak­ing one item from the scale results in insta­bil­i­ty. Both employ­ers and employ­ees will be affect­ed by this tax repeal in one way or another.