The tax reform law added a provision that took out the existing minimum essential coverage penalty. Specifically, Section 11081 of the tax reform law amended Section 5000A of the Internal Revenue Code by replacing the 2.5% alternative percentage with 0% and the $695 per adult calculation with $0. Those changes cascaded throughout to make any shared responsibility payment $0.
Lawmakers included the elimination of Obamacare penalties for a couple of reasons. First, many Republican lawmakers had unsuccessfully looked for ways to repeal the Affordable Care Act explicitly, but they had failed to reach consensus when they addressed the issue head-on. Second, Congress was able to claim cost savings by eliminating the individual mandate, because even though tax penalty revenue would fall, projections expect cost savings from fewer people participating in the program will more
than offset lost penalties.
