The Internal Revenue Service will not accept electronically filed tax returns for the upcoming filing season in which people fail to note whether they have health insurance, according to an agency announcement that is a reversal of informal policy under the Obama administration.
Failure to note health insurance status could result in tax refund delays, according to the IRS.
"The IRS will not accept the electronic tax return until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment," the agency said in a statement. "In addition, returns filed on paper that do not address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed."
Obamacare requires all individuals to have health insurance or pay a fine, if the government determines they can afford it. The fine for not having insurance in the next filing season will be $695 per adult, or 2.5 percent of household income, whichever is more.
Insurers have been skeptical about whether the Trump administration would enforce the penalty, known as the individual mandate, and many of them raised rates on premiums in states to prepare for such a decision. The mandate is one of the most unpopular portions of Obamacare, but it is intended to help bring healthier people into health insurance markets to help balance out the medical claims of more expensive enrollees. Various experts have questioned its efficacy.
The Trump administration has been accused by Democrats of trying to "sabotage" the law as President Trump has said he would allow it to "implode" and has shortened the timeline for open enrollment and cut navigator and advertising funding. Trump has also encouraged a bipartisan deal on Obamacare include "relief" from the individual mandate.
Under former President Barack Obama, the IRS would still process returns that left this question unanswered, though taxpayers would receive a letter saying they had failed to answer the question. Obama instructed the IRS to stop processing these filings, called "silent returns," beginning with the 2016 tax filing season, but Trump ditched those plans when he became president, and went back to the previous policy.
Americans are excused from paying the penalty if they cannot afford it, which happens officially if the cost of coverage exceeds roughly 9.7 percent of their income. Other reasons include being undocumented or incarcerated.
The Obama administration often allowed for "hardship" exemptions, which critics have said were too generous and allowed too many people to bypass the insurance requirement, allowing healthier, coveted customers to eschew the plans.