It has been over a year since the Tax Cuts and Jobs Act of 2017 went into effect, but there are still a few changes coming. For example, the Affordable Care Act’s shared responsibility payment — the penalty for not having the right health insurance — has been phased out starting this year.
The individual mandate that you have at least minimal health insurance is still in effect, but the penalty has been removed. Some states still have penalties similar to the federal one, but Georgia does not.
Another effect of the Tax Cuts and Jobs Act on healthcare is the increase in what you can contribute to a health savings account (HSA). Those with high-deductible policies that comply with HSA guidelines can now contribute slightly more to their HSAs:
- Self-only coverage: an additional $550, or $3,500
- Family coverage: an additional $100, or $7,000
As you may already know, the Tax Cuts and Jobs Act raised the standard deduction substantially. That means that far fewer people will benefit from itemizing deductions. If you are planning to itemize, however, you will need to be aware that the threshold for itemizing unreimbursed medical and dental expenses has been raised.
In 2010, according to Accounting Today, the Affordable Care Act increased the threshold for medical and dental expense deductions from 7.5% to 10% of your adjusted gross income. For 2017 and 2018, the Tax Cuts and Jobs Act lowered the threshold to 7.5% — but for 2019, it’s back at 10%.
So, for this year, you must spend more than 10% of your adjusted gross income on unreimbursed medical and dental expenses in order to qualify for the deduction.
It’s natural to be somewhat confused about how healthcare expenses are treated under the Tax Cuts and Jobs Act. If you have questions, contact an experienced tax attorney.