- Employer-sponsored coverage (including COBRA coverage and retiree coverage)
- Coverage purchased in the Individual Market, including a qualified health plan offered by the Health Insurance Marketplace (also known as an Affordable Insurance Exchange)
- Medicare Part A coverage and Medicare Advantage plans
- Most Medicaid coverage
- Children’s Health Insurance Program (CHIP) coverage
- Certain types of veterans health coverage administered by the Veterans Administration
- Coverage provided to Peace Corps volunteers
- Coverage under the Non-appropriated Fund Health Benefit Program
- Refugee Medical Assistance supported by the Administration for Children and Families
- Self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014 (for later plan or policy years, sponsors of these programs may apply to HHS to be recognized as minimum essential coverage)
- State high risk pools for plan or policy years that begin on or before Dec. 31, 2014 (for later plan or policy years, sponsors of these program may apply to HHS to be recognized as minimum essential coverage)
Affordable Care Act (Obamacare)
Beginning with the 2014 Federal individual tax return, taxpayers will have to be reporting to the IRS data concerning their health insurance. Everyone with the exception of those who meet one of the limited MUST have health insurance that meets the minimum essential coverage – or, they will pay a Shared Responsibility Payment (hereafter referred to as a “penalty”).
2015 Monthly Bronze Plan Premium: The IRS released the 2015 monthly national average bronze level plan premiums that will be used in determining the shared responsibility penalty for individuals for the 2015 tax year. The individual shared responsibility payment for a tax year is the lesser of (1) the sum of the monthly penalty amounts, or (2) the sum of the monthly national average bronze plan premiums for the shared responsibility family. For 2015, the monthly national average bronze plan premium is $207 per individual, with a maximum of $1,035 for a shared responsibility family with five or more members. Rev. Proc. 2015-15, 2015-5 IRB .
Minimum Essential Coverage is the type of coverage you’ll need to avoid the fee for not having insurance under ObamaCare (the Affordable Care Act). In order to be in compliance with the law, you must maintain minimum essential coverage throughout the year or pay a fee for each month you go without it (although you are allowed up to three months in a row each year without coverage, due to a coverage gap exemption).
- Short Term Health Plans
- Fixed Benefit Health Plans
- Supplemental Medicare like Part D and Medigap
- Some Medicaid covering only certain benefits
- Vision only, Dental only, and limited benefit plans
- Grandfathered Plans (You will avoid the fee, but won’t get the new rights and protections)
There are some new forms pursuant to the provisions of the Affordable Care Act (ACA) that will become familiar to most taxpayers beginning with 2014. I have included a discussion about these new forms later in this webpage.
Exemption from the mandate to have health insurance
If you plan on applying for an exemption, don’t leave it to the last minute. In most cases, you’ll have to fill out a form and wait for confirmation before you can report the exemption. In addition, many exemptions require certain documentation to verify you qualify. Obtaining that documentation also takes time. Waiting can mean a delay of your Federal Tax Refund.
Most exemptions will require documentation. If you cannot provide documentation, you may still qualify for certain exemptions, like for being homeless. That safest way to avoid the fee is to simply obtain health insurance. Some exemption will buy you more time to sign up and these tend to be the ones with more flexible requirements of proof. Other exemptions simply allow you to not pay the tax and these will tend to require proof.
Unless you have an exemption certificate (assuming you do NOT have health insurance), you should expect to have to pay the penalty with your return.
- 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
Applying for a hardship exemption
To apply for a hardship exemption, use this exemption form: Individuals who experience hardships (PDF). See instructions to help you fill out an exemption application (PDF).
How long a hardship exemption lasts
Hardship exemptions are usually provided for the month before the hardship, the months of the hardship, and the month after the hardship. However, the Marketplace may provide the exemption for additional months after the hardship, including up to a full calendar year.
- For a hardship exemption based on affordability, the exemption will be granted for the remaining months in the coverage year.
- For people ineligible for Medicaid only because a state hasn’t expanded Medicaid coverage, the hardship exemption will be granted for the whole calendar year.
- For people eligible for Indian Health Services, the hardship exemption will be granted on a continuing basis. It may be kept for future years without having to submit another application. This is true as long as there are no changes to your membership in a tribe or eligibility for services from an Indian health care provider.
ObamaCare Hardship Categories and Documentation
You may qualify for a hardship exemption if you experienced one of the following:
|Hardship number||Category||Submit this documentation with your application|
|1.||You were homeless.||None|
|2.||You were evicted in the past 6 months or were facing eviction or foreclosure.||Copy of eviction or foreclosure notice|
|3.||You received a shut-off notice from a utility company.||Copy of shut-off notice from a utility company|
|4.||You recently experienced domestic violence.||None|
|5.||You recently experienced the death of a close family member.||Copy of death certificate, copy of death notice from newspaper, or copy of other official notice of death|
|6.||You experienced a fire, flood, or other natural human-caused disaster that caused substantial damage to your property.||Copy of police or fire report, insurance claim, or other document from government agency, private entity, or news source documenting event|
|7.||You filed for bankruptcy in the last 6 months||Copy of bankruptcy filing|
|8.||You had medical expenses you couldn’t pay in the last 24 months.||Copies of medical bills|
|9.||You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.||Copies of receipts related to care|
|10.||You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and the Children’s Health Insurance Program (CHIP), and another person is required by court order to give medical support to the child.||Copy of medical support order AND copies of eligibility notices for Medicaid and CHIP showing that the child has been denied coverage|
|11.||As a result of an eligibility appeals decision, you’re eligible either for:1) enrollment in a qualified health plan (QHP) through the Marketplace, 2) lower costs on your monthly premiums, or 3) cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace.||Copy of notice of appeals decision|
|12.||You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.||Copy of notice of denial of eligibility for Medicaid|
|113.||You received a notice saying that your current health insurance plan is being cancelled, and you consider the other plans available unaffordable.||Copy of notice of cancellation|
|14.||You experienced another hardship in obtaining health insurance.||Please submit documentation if possible|
|NEED HELP WITH YOUR APPLICATION? Visit HealthCare.gov or them at 1-800-318-2596. Para obtener una copia de este formulario en Español, llame 1-800-318-2596. If you need help in a language other than English, call 1-800-318-2596 and tell the customer service representative the language you need. We’ll get you help at no cost to you. TTY users should call 1-855-889-4325.|
The fee (penalty) in 2015If you don’t have coverage in 2015, you’ll pay the higher of these two amounts:
- 2% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,000 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
- $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.
The fee for not having coverage in 2014If you didn’t have coverage in 2014, you’ll pay the higher of these two amounts when you file your 2014 federal tax return:
- 1% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,000 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
- $95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285.