The individual mandate instituted by the Patient Protection and Affordable Care Act has been in effect since 2014 and continues to be in effect today and for the foreseeable future. The news and everyone concerned has reported that the Individual Mandate was repealed but to be clear the actual mandate is still the law of the land now and in the future. This is seen to be true as the state of Ohio has requested a waiver from the Individual Mandate despite the passing of the Tax Cuts and Jobs Act of 2017 which many believe repealed the mandate. Ohio Department of Insurance Director Jillian Froment said in a March 30 letter to HHS Secretary Alex Azar that the reason why the state was requesting the waiver was that “the (tax) legislation zeroed out the penalty that is associated with the individual mandate … but … did not eliminate the mandate itself.”
Not having enough votes in the U.S. Senate to change the Affordable Care Act, Republicans did the next best thing, remove the teeth from the mandate by temporarily removing the penalties associated with the law. Through reconciliation the changes may only be in effect for 10 years so the individual mandate is due to return in 2027 unless the law is changed before then.
In the mean time the elimination of the penalty effective in 2019 will have some negative effects on coverage rates of individuals. As an example of this, in the same waiver application to HHS, Ohio actuaries predicted individual market enrollment will fall from 307,000 people this year to 248,000 enrollees in 2022, and average monthly premiums will increase from $493 to $600 in the same time frame.
With similar actuarial analysis being performed in other states, legislatures in Vermont and New Jersey were quick to act to restore the individual mandate at the state level. So as the federal individual mandate penalties drop off in 2019, they are being restored in New Jersey at the same penalty amounts as would have been in effect at the federal level. And just to be sure, in case by some miracle the federal mandate is restored, the New Jersey law also allows for a tax credit equal to the federal penalty, if imposed again. Vermont’s individual mandate is not scheduled to begin until 2020.
New Jersey’s actuaries feel that by retaining the individual mandate penalties they will keep enrollment rates higher and as such they have approved a 9.3% average cost reduction on insurance premiums in the New Jersey healthcare marketplace. This is much better than the 20% plus increase expected by the Ohio actuaries.
Along with the individual mandate, insurers and self-insured employers in New Jersey will have new requirements to report coverage data at years end, 2019. The reports are currently undefined, but is expected to be in line with IRS Section 6055 which requires Part III on ACA form 1095-C and part IV of the ACA form 1095-B. Basically an individual is covered for a given calendar month when enrolled in MEC coverage for at least one day in the month.
Rules and guidelines governing the actual reporting requirements and methods in New Jersey are pending and when established they are expected to be very similar to the IRS Section 6055 requirements.
In summary, in 2019, the Federal government requires reporting of individual coverage by insurers and self-insured employers via IRS Section 6055. This is unchanged from years past. In addition, states such as Massachusetts and New Jersey have existing laws in effect requiring reporting coverage on individuals. Vermont has passed legislation requiring the same in 2020 and in other states such as Maryland, California, Connecticut, Hawaii, Minnesota, Rhode Island and Washington, as well as the District of Columbia, legislators are considering similar proposals. As such, the requirements for employers and insurers to report coverage will be increased in the coming years. And if the savings seen in New Jersey’s market place premiums are seen in other early adopting states , the other states will likely soon follow. And ultimately, if nothing changes in the next 10 years, we will see the return of the individual mandate penalties associated with the original ACA law which were temporarily suspended by reconciliation measures in 2017.