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Are You Exempt from the Health Insurance Penalty?

Posted on: February 27th, 2015 by David Snoble

As you’re probably well aware, the requirement under the Affordable Care Act (ACA) for individuals to obtain at least minimal health insurance coverage went into effect in January 2014. If you didn’t purchase a health insurance policy, you may have to pay a penalty with your 2014 federal income tax return.

But not everyone is required to pay the penalty. In fact, the list of exemptions is extensive. Here is a brief explanation of common exemptions.

  • Unaffordable coverage. The minimum amount you would have paid for employer-provided coverage or a “bronze level” plan exceeds 8% of your actual household income for the year.
  • Short coverage gap. You didn’t have coverage for less than three consecutive months during the year.
  • Income below filing threshold. Your gross income or household income is less than the applicable minimum threshold for filing a tax return.
  • Citizens living abroad and certain noncitizens. This exempts certain U.S. citizens, including those who spent more than 330 days abroad during a 12-month period and qualified noncitizen residents.
  • Incarcerated individuals. The requirement doesn’t apply to someone in a jail, prison, or similar penal institution.
  • Unaffordable aggregate self-only coverage. The aggregate cost of self-only employer-provided coverage for two or more family members exceeds 8% of household income.
  • Coverage gap. If you had a gap in your coverage at the beginning of 2014 but enrolled in the marketplace before May 1, you’re exempt.
  • General hardship. Circumstances such as homelessness, eviction, foreclosure, domestic violence, death of a close family member, or unpaid medical bills prevented you from obtaining coverage.

This list is not all-inclusive. For other exemptions, visit the IRS website.