As most of us know by now, the “individual mandate” of the Affordable Care Act states that all Americans must have health insurance as of Jan. 1, 2014.
This mandate applies to any citizen whose income falls above a designated percentage of the federal poverty limit who is not covered by an employer’s health plan. Those who don’t have insurance are required to pay a substantial penalty.
There are exceptions to the mandate, however, particularly for those whose families are struggling to make ends meet. Learn if you qualify and how to apply for an exemption if you do.
The Individual Mandate — Subsidies and Exemptions
In 2016, taxpayers may qualify for an exemption to the individual mandate if their income falls below 138 percent of the federal poverty limit, or $16,242 per year for an individual plus $5,741 for each member of the family. In some states, individuals whose income is no greater than this amount may also qualify for Medicaid. (Learn your state’s Medicaid requirements at Medicaid.gov.)
Individuals whose income is greater than 138 percent but less than 400 percent of the federal poverty level will typically not qualify for an exemption. However, they will qualify for a tax subsidy to help pay their premiums.
Those who make more than 400 percent of the FLP ($47,080 annually for an individual) may still qualify for an exemption under certain circumstances. These include the following:
- You are not required to file a federal tax return because your income is too low*
- You did not have health insurance for three months or less*
- You are in the United States illegally*
- You are part of a Native American tribe*
- You are incarcerated*
- You are a member of a health care sharing ministry
- You object to insurance on the basis of your religion.
- The annual premiums for the least expensive health insurance available to you cost mothan 8.13 percent of your projected annual income for 2016.
- You have a qualifying hardship
*These exemptions are applied automatically when you file your federal income tax return.
Hardship exemptions are available to individuals or families whose life circumstances make it impossible to buy insurance for some period of time. These individuals do not have to purchase health insurance or pay a penalty during the period for which the hardship exemption applies.
Examples of circumstances for which the federal government grants hardship exemptions include:
- Eviction or foreclosure
- A notice that your utilities are about to be shut off
- Recent bankruptcy (within 6 months)
- A fire, flood or other natural or man-made disaster that damaged your home
- Medical expenses you cannot afford to pay that amount to “substantial debt”
- Death of a family member
- Unexpected illness of a family member who requires your care, such as an aging parent, a spouse or a child
- You qualify for Medicaid based on income but your state did not expand Medicaid under the ACA
- You are a recent victim of domestic violence
Hardship exemptions are not automatic; each request is evaluated individually. To begin the process, download the appropriate form; fill it out completely and mail it to the Health Insurance Marketplace at the address shown on the form.
At Carmoon Group, we help you find affordable insurance solutions that are uniquely suited to your individual needs. Give us a call at 516-292-3780 and set up an appointment for your free 30-minute consultation — we’re here every weekday from 9 a.m. to 6 p.m. Can’t call during business hours? Just fill out our online form and we will contact you at a convenient time.