People who do not have qualifying health insurance are subject to a penalty under the Affordable Care Act. The individual mandate was repealed by the Tax Cuts & Jobs Act; however, the repeal does not take effect until after December 31, 2018. It still applies to the 2018 tax year for which tax returns will be filed in the next several months. Fortunately, a number of exemptions exist that protect individuals from being subject to the penalty. These exemptions include:
- Members of religious sects recognized by the Social Security Administration who have a religious conscience exemption
- Members of health care sharing ministries
- Incarcerated individuals, other than those who are incarcerated pending the disposition of charges
- Members of federally recognized Indian tribes
- Individuals qualifying for services through an Indian health care provider or the Indian Health Service
- Individuals with short coverage gaps of two months or less. An individual is treated as having coverage for a full month if she is covered for at least one day during a month.
- Individuals whose household or gross income is below the threshold for having to file an income tax return
- Citizens living abroad and certain noncitizens
- Individuals who are ineligible for Medicaid solely because the state in which they reside did not participate in Medicaid expansion
- Individuals with household income below 138% of the applicable year federal poverty line for their family size who reside in a state that did not expand Medicaid coverage
- Individuals enrolled in certain Medicaid programs that are not Minimum Essential Coverage
- Individuals who could not afford coverage based on their actual household income
- Individuals who could not afford coverage based on their projected household income.
- Individuals in families where the aggregate cost of self-only coverage for two or more employed individuals is unaffordable and the cost of employer-sponsored coverage for the entire family is unaffordable
The General Hardship Exemption
In addition, individuals who qualify for a general hardship exemption will be exempt from the penalty. Federally facilitated and federal partnership marketplaces may consider the following circumstances as keeping an individual from obtaining coverage under a qualified health plan:
- Becoming homeless.
- Being evicted or facing eviction or foreclosure.
- Receiving a shut-off notice from a utility company.
- Recently experiencing domestic violence.
- Experiencing the death of a close family member.
- Experiencing a fire, flood, or other natural or human-caused disaster that results in substantial damage to the individual’s property.
- Filing for bankruptcy.
- Incurring unreimbursed medical expenses that resulted in substantial debt.
- Experiencing unexpected increases in essential expenses due to caring for an ill, disabled, or aging family member.
- Claiming a child as a tax dependent when that child has been denied coverage in Medicaid and CHIP, and another person is required by court order to provide medical support to the child.
- As a result of a marketplace appeals decision, being determined eligible for (1) enrollment in a QHP, (2) lower costs on monthly premiums, or (3) cost-sharing reductions for a period of time during which the individual was not enrolled in a QHP through the state marketplace.
State-based marketplaces can use the same criteria, but have the flexibility to develop their own criteria, as long as they meet the requirements in the HHS regulations.