212-695-7495 info@camlife.com

News & Thought Leadership

4 Things You Should Know About the $0 Individual Mandate Penalty

The Tax Cut and Jobs Act has reduced the Individual Mandate Penalty to $0 starting with the 2019 year. This removal of the Individual Mandate Penalty could have a large impact on the healthcare industry. Here are some predictions on the impact of removing the penalty:

1. Enrollment in the individual market will decline

Once the individual mandate penalty is removed, there will be less incentive for healthier and unsubsidized people to stay in the market. If they no longer have health-insurance, they would not need to worry about paying a penalty fee under ACA. In addition, because they are healthier and do not qualify for subsidies, they do not have the same dependence on health coverage.

2. Morbidity of the risk pool will go up

Because healthier individuals will be leaving the risk pool, the number of less healthy individuals will be disproportional to the number of healthier individuals. As a result, the balance between healthier and less-healthy individuals in the pool will be thrown off, and the morbidity of the overall health pool will increase.

3. Some states will see larger changes than others

Some states have higher populations of less-healthy and subsidized individuals than others. These states will not be as impacted as states with a larger population of healthier and unsubsidized individuals. Premiums are likely to stay stable in these states but are liable to increase in states with more healthy and unsubsidized individuals.

4. State-based mandates might replace the Individual Mandate Penalty

Some state governments are considering implementing state-based Individual Mandate Penalty to reduce the impact of the removal of the Individual Mandate Penalty. Residents of these states may still have to pay penalties for not having a healthcare plan.

The impact of the removal of the Individual Mandate Penalty will have varying impacts on different states and populations across the country. To learn more about how the Individual Mandate Penalty will affect healthcare costs in 2019, check out our article on the 4 Drivers of Premium Changes.  

Concerned how changes to state and federal rules impact your benefits plan? Email us at info@camlife.com for a consultation. 

Print Friendly, PDF & Email
Arthur Grutt