Fewer people hit with Obamacare penalty last year

Why tax reform is so hard
Why tax reform is so hard

Some 4 million households paid the Obamacare penalty for not having health insurance last year, new Internal Revenue Service data shows.

That's down from 5.6 million a year earlier.

The average penalty was $708, according to the report filed by the agency's Taxpayer Advocate Service, which looked at returns filed through April 27.

Also, roughly 10.7 million households requested exemptions from the individual mandate, which requires nearly all Americans to have coverage or pay a penalty. People can request exemptions for a variety of reasons, including if coverage is considered unaffordable -- when premiums are more than 8.13% of their household income -- or they were unable to renew existing coverage.

Related: Actually, Obamacare will be available everywhere in 2018

In 2015, some 11 million returns claiming exemptions were filed.

President Trump, Health Secretary Tom Price and other officials have frequently pointed to the number of people paying the penalty or asking for hardship exemptions as proof that Obamacare has made insurance unaffordable and should be repealed.

Insurers are concerned that the Trump administration will be more lax about enforcing the individual mandate, which is key to convincing younger and healthier people to sign up for health insurance.

Hours after taking office, President Trump signed an executive order requiring agencies to minimize as much of Obamacare's economic impact as they could by law. In response, the IRS halted a plan to start rejecting returns that fail to indicate whether a taxpayer had coverage. The taxpayer advocate said it supports reinstating the plan to reject these returns.

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