President Donald Trump signed an executive order dated January 20, the date of his inauguration, paving the way for the eventual repeal of the Affordable Care Act.
While he didn’t tell tax practitioners to ignore line 61 on their clients’ 1040s, the Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal has lessened the effect that noncompliance might bring.
Specifically, the order directs, “To the maximum extent permitted by law, the Secretary of Health and Human Services and the heads of all other executive departments and agencies with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any state or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”
Although there are varying interpretations of the effect of the order, some have suggested that Rep. Tom Price, R-Ga., when he is confirmed as Health and Human Services Secretary, could issue a blanket hardship exemption from the individual mandate to everyone that doesn’t have health insurance. Regardless, it is clear that younger and healthier individuals will begin leaving the health insurance marketplaces, thereby driving up premiums.
Meanwhile, it is not yet known if the IRS will change its policy of rejecting “silent returns.” It has said that it would reject any 2016 Form 1040s that are “silent” as to information related to the individual mandate. A silent return is one where Box 61 is not checked indicating full-year coverage, or if Forms 8965 and 8962 are not included indicating that an exemption applies, or a premium tax credit was reconciled or a penalty payment is made.
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