The ACA's individual mandate is extra mandatory this year

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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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One of the most consequential and controversial parts of the Affordable Care Act (ACA) is the individual mandate. This requires every taxpayer to either have health coverage, qualify for an exemption from health coverage or make a "shared responsibility payment," aka, pay a tax penalty. Taxpayers are asked to say which option they're choosing on their tax returns.

In the past, the IRS would accept returns that didn't answer the health coverage question, but wouldn't consider them complete. Millions of people did this last year, the Associated Press reported, risking the chance the IRS would notice and send a scary letter. But this year, when it seems like Washington is doing everything possible to tear down the ACA, the IRS has decided to become a stickler about the individual mandate.

The tax agency announced this month that for the 2018 tax season, it would not accept any electronic returns that don't address whether the filer has health coverage. Paper returns sent without answering the health question will be suspended until the IRS gets the answer. So anyone filing a return has to indicate whether they have health coverage, have an exemption from health coverage or are paying the penalty.

The ACA is still the law

So why the change? The rest of the federal government seems bent on cutting the law off at the knees. Congress has voted (unsuccessfully) on several repeal bills this year. The Trump administration slashed funding for advertising, navigators and insurer-subsidy payments to help people afford plans.

We asked the IRS, and in a statement, the agency said it's doing this because the ACA is still the law. After reviewing its previous process, the agency decided it was easier to make taxpayers answer the health coverage question upfront rather than allowing them to file incomplete returns and following up after.

"Identifying omissions and requiring taxpayers to provide health coverage information at the point of filing makes it easier for the taxpayer to successfully file a tax return and minimizes related refund delays," the statement said.

The change doesn't just apply to the upcoming tax season. The IRS in September started sending letters to 130,000 taxpayers who didn't answer the health coverage question on 2014 and 2015 tax returns. So if you skipped the question in previous years, the taxman is coming.

How to keep the IRS off your back

So how do you stay out of trouble? The easiest way to is to have healthcare. Specifically, "minimum essential coverage," in the poetic parlance of the IRS.

Most employer-provided coverage meets this standard, as does coverage purchased through a federal health insurance marketplace, Medicare, most Medicaid and veteran's healthcare programs. Health insurance purchased directly from an insurer counts too.

You may also qualify for an exemption, usually if coverage where you live is considered unaffordable or you don't make enough to file a tax return. There are a bunch of other exemptions, though, and you can see them on the IRS website.

Otherwise, you'll have to pay. The value of the "individual shared responsibility payment" for an adult is either 2.5% of your income above the minimum required to file a tax return or $695, whichever is greater.

Having health insurance is probably your best bet. Open enrollment for ACA plans starts Nov. 1. If you need help signing up, check out our state-by-state guide to open enrollment.

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