The ACA mandate is on the block (again). Why you should still get health insurance

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Myles Ma, CPFCSenior ReporterMyles Ma, CPFC, is a senior reporter and certified personal finance counselor at Policygenius, where he covers insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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Senate Republicans aren't done trying to undo major aspects of the Affordable Care Act (ACA). On Tuesday they told reporters they plan to repeal the Obamacare individual mandate as part of a broader tax bill.

"We're going to repeal the tax on poor Americans," Sen. John Cornyn said to CBS.

What's the ACA mandate?

The individual mandate is one of the most consequential and controversial parts of the ACA. It requires every taxpayer to either have health insurance, qualify for an exemption from health coverage or pay a penalty. Everyone has to address the question in their tax returns.

Many Republicans don't like the individual mandate. President Donald Trump on Monday called the provision "unfair and highly unpopular" and called for its end. Aside from that, repealing the mandate would save the federal government $338 billion from 2018 through 2027, according to the Congressional Budget Office (CB0). Republicans need that revenue to help offset the big tax cuts they want to pass.

On the other hand, a repeal would reduce the number of people with health insurance by 13 million, the CBO says, since no one would be required to get coverage. Republicans hope to pass a tax bill with a repeal of the individual mandate by the end of the year.

Even with this repeal in the pipeline, it's probably still a good idea to have health insurance, for a few reasons.

1. You can probably afford it

Washington has laid siege to the ACA all year with repeated attempts to repeal, replace or undermine the health law. But people are still signing up. One potential reason is that for more than half of the 10.7 million people eligible for a 2017 ACA plan, paying a premium will be cheaper than paying the tax penalty, according to the Kaiser Family Foundation. The tax penalty is either 2.5% of your income above the minimum required to file a tax return or $695, whichever is greater.

Even better, for about 4.5 million people, a bronze-level plan will cost $0 in 2018. The reason is complicated. In October, Trump stopped making cost-sharing reduction payments to insurers. These payments reimbursed them for giving discounts to low-income people signing up for ACA plans.

To make up for the lost payments, insurers raised prices. However, many states asked insurers to load these increases on silver-level plans. The value of another ACA subsidy, the premium tax credit, is pegged to the price of silver-level plans. The more expensive these plans get, the bigger the tax credit people get. In the end, many people are actually getting a bigger subsidy than they did before.

2. The repeal might not pass

Republicans vowed to repeal and replace the ACA this year. They tried a bunch of times but it didn't happen.

A tax bill may not incite the same passions as a life-and-death issue like health insurance, but including an individual mandate repeal in their plan could change that, making the bill harder to pass. The IRS has vowed to be extra strict in upholding the individual mandate in 2018, so if the repeal doesn't pass and you haven't signed up for healthcare by the shorter Dec. 15 deadline, your tax return could get rejected.

3. It could cost you otherwise

You may be the picture of health with minimal health costs now, but illness or injury can strike even the healthiest, most careful person. A night's stay in a hospital can cost thousands of dollars and surprise medical bills can ruin your finances. That's ultimately what health insurance protects against.

Even the best health insurance plan can't guarantee your health. But health insurance can help ensure you don't go broke when you get sick.

We've got a guide to finding affordable health care here.

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