The Affordable Care Act (ObamaCare) required all individuals to obtain health insurance coverage by January 1, 2014, or else pay a penalty on their 2014 tax return. The penalty tax is $95 per uncovered person in your household or 1o% of your income, whichever is greater. However, despite the law's mandate that individuals without health insurance pay a tax, there are a number of exemptions including 14 hardship exemptions you may qualify for.
Certain exemptions, including hardship exemptions, must be OK'd by your state's health care exchange. You'll receive a certificate number which must be entered on your tax return prior to filing. To obtain the exemption, individuals should first submit an application to the exchange along with the necessary documentation. The process takes at least two weeks, and may take considerably longer if you wait until April 15th is closing in.
You may qualify for an exemption from the penalty for not being insured if:
- You’re uninsured for less than 3 months of the year
- The lowest-priced coverage available to you would cost more than 8% of your household income
- You don’t have to file a tax return because your income is too low
- You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
- You’re a member of a recognized health care sharing ministry
- You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
- You’re incarcerated (either detained or jailed), and not being held pending disposition of charges
- You’re not lawfully present in the U.S.
- You qualify for a hardship exemption
If any of the following circumstances apply to you, you may qualify for a “hardship” exemption from the penalty:
- You were homeless
- You were evicted in the past 6 months or were facing eviction or foreclosure
- You received a shut-off notice from a utility company
- You recently experienced domestic violence
- You recently experienced the death of a close family member
- You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property
- You filed for bankruptcy in the last 6 months
- You had medical expenses you couldn’t pay in the last 24 months that resulted in substantial debt
- You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member
- You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. (In this case, you don't have the pay the penalty for the child)
- As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace
- You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act
- Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable
- You experienced another hardship in obtaining health insurance
Hardship Exemption Application
If you think you might qualify for one of these hardship exemptions, you have to apply for it through your state exchange. You can download a free copy of the application below:
If you have further questions about the Affordable Care Act tax penalty or require assistance completing your exemption, please contact us right away. Thanks!