The Obamacare mandate repeal: What exchange shoppers need to know

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Myles Ma, CPFCSenior ReporterMyles Ma, CPFC, is a certified personal finance counselor and former senior reporter at Policygenius, where he covered 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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Congress passed an overhaul of the tax code Wednesday that eliminates the penalty people pay for foregoing health insurance. That penalty was created by the individual mandate, a key component of former President Barack Obama's signature health care law. President Donald Trump is expected to sign the tax bill into law by the end of the year, meaning the most contentious aspect of Obamacare is on its way out. Here's what that means for your money and your health care prospects.

You still have to pay a penalty for skipping health insurance in 2017

The repeal of the individual mandate doesn't take effect until 2019. So if you skipped health coverage in 2017, you'll still face a penalty of either 2.5% of your taxable income or $695, whichever is greater, when you file your taxes in 2018, and you still need to make sure you're covered for 2018, or you'll face a penalty when you file your return in 2019.

Most people who aren't covered by their employers or a government program have already decided on their health coverage for 2018 anyway, since the deadline to sign up for a plan through the federal marketplace lapsed on Friday. However, a few state marketplaces are still open. Check our state-by-state guide to open enrollment to see if you still have time to buy health coverage for 2018.

Obamacare persists ...

The Affordable Care Act, also know as "Obamacare," still exists, and it contains many provisions the mandate repeal won't affect. Most notably, health insurers can't turn away people with pre-existing conditions and states can elect to expand Medicaid to anyone making an income below 133% of the federal poverty level.

But plans will probably get more expensive

The individual mandate is considered instrumental to keeping marketplace premiums from growing too high. Without the penalty, healthy people have less incentive to get health insurance. The Congressional Budget Office estimates 13 million fewer people will get health insurance because of the repeal. If that happens, insurers face covering a disportionately sick pool of people. To cover all those medical bills, they likely have to raise premiums — or pull out of the marketplaces entirely to preclude operating at a loss. That could lead to some counties not having any insurers on the marketplace. In either case, the repeal will likely lead to fewer choices and higher prices on the exchanges.

Will I be able to afford Obamacare in 2019?

Maybe. The repeal of the individual mandate is expected to cause premiums to rise, but Obamacare still provides assistance to low-income Americans who buy health insurance through the marketplaces. If you qualify for these subsidies, the expected spike in premiums won't necessarily put a health care plan out of your reach. Having said that, if you don't get subsidies, health insurance might be really expensive.

Is it OK to just skip health insurance once the penalty expires?

Not fundamentally, because the mandate isn't really the driving force behind having health insurance anyway. plans may be expensive, sans subsidies, but going without health insurance can be really expensive too. An emergency room stay can cost thousands of dollars. Even if you're perfectly healthy right now, you can't predict whether you'll get sick or injured in the future. So Congress' move shouldn't dissuade you from shopping the Obamacare marketplaces this year or next. It's always been risky to forego health insurance.

Keep in mind, too, insurance premiums spike when people flee the market. By buying a policy, you'll be part of a pool of people helping to insure each other. Lots of people go bankrupt or lose their homes because of medical bills. Your premium payment helps make sure everyone (including yourself) has a little more protection in the event something goes wrong.

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