One of the most recent political topics is the Obamacare and Affordable Care Act (ACA). Many people would say the ACA is not really affordable for the average household. Many Americans have complained that by forcing taxpayers to obtain a medical coverage is unconstitutional and un-American in that our freedom is being taken by forcing people to pay for healthcare. Healthcare premiums that many cannot afford. However you view this, there is one thing I think we can all agree upon, and that is the penalty that is enforced by the IRS for not having medical coverage is unpleasant.
As a tax firm, we consistently hear the same complaints on how the ACA has caused more financial hardship than ever before. Annual premium increases cause an additional frustration to the mix. When taxpayers cannot afford premiums, it makes sense for a healthy American to opt out of ACA and deal with the penalty later. The Trump administration has made attempts to overturn the ACA and its problems, but to date, have not succeeded. Many Americans are awaiting the day for change.
What do we do until change happens to benefit Americans and our need for affordable medical care? Many go without coverage and pay the penalty. However, when President Trump took office, the Internal Revenue Service changed the way it handled the health coverage by allowing silent returns. A silent return allows the taxpayer to opt out of paying the penalty. However, the penalty does not automatically disappear. There is a chance the IRS may send taxpayers a notice that they owe for their Shared Responsibility which means the penalty for not having healthcare.
There are risks to filing a “silent return” and skipping the penalty. In an IRS statement “Legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe.” The IRS also indicated “taxpayers may receive follow-up questions and correspondence at a future date.” Some tax preparers will not file a silent-return, however with many taxpayers owing this high penalty this year, it makes sense to offer the option to pay at a later date for the penalty if congress does not the ACA changes.
At this point, it is uncertain whether the IRS will follow up with the silent-return missing payments. Politics may play a factor in the outcome of the penalty enforcement. For the past several years, the penalty has been minimal for most taxpayers opting out of ACA. However, Obamacare indicated that for 2017, a significant increase in the penalty such as $962 imposed per person without healthcare coverage which is approximately triple the penalty from 2016. Some taxpayers however feel a $962 penalty is financially logical rather than spend $7000+ annually for healthcare premiums.