Late last year, Congress passed the Tax Cuts and Jobs Act, which included a provision effectively repealing the requirement for most Americans to have health insurance. This “individual mandate” was originally imposed by the Affordable Care Act (“ACA”). Beginning in 2019, the tax penalty individuals face if they do not enroll in health coverage considered minimum essential coverage (“MEC”) will drop to zero.
For many Americans, the individual mandate was satisfied by the health coverage provided by employers. From an employer perspective, the repeal of the individual mandate penalty might first appear to have little effect. The ACA’s employer shared responsibility provisions (also known as the “pay-or-play penalties”) remain intact, and applicable large employers (“ALEs”) will likely continue to provide group health coverage to employees and their dependents even though the individual mandate is no longer in effect. And though the Congressional Budget Office projected that an additional 4 million individuals will go uninsured when the federal penalty disappears, most of these individuals were previously insured in the individual market, not the group market.
But the repeal of the federal penalty has spurred activity at the state level that will require employer attention. Many states are concerned that the resulting increase in uninsured individuals will further strain state safety nets, resulting in accelerated efforts to strengthen state insurance markets by imposing state-law individual mandates to reduce the rate of uninsured individuals. Continue Reading