Still Unclear About Affordable Care Act Rules? — Healthshare

Still Unclear About Affordable Care Act Rules?

question-mark-person-xsmI get a lot of questions about just who is required to carry Affordable Care Act (ACA) health insurance. Many people still get confused (and rightfully so) about who is exempt and what the penalties are for not getting insured. I thought I’d share the most common questions about exemptions and fines for non-coverage.

ACA Fines and Exemptions – Frequently Asked Questions

Q. How much is the fine for being uninsured?

A. The tax penalty is a flat fee, or a percentage of your household income (whichever is greater). Penalties increase each year as follows:

  • 2014: $95 per adult; $47.50 per child, up to $285 per family (or 1 percent of family income minus the federal tax-filing threshold of $10,000/single; $20,000/jointly).
  • 2015: $325 per adult; $162.50 per child, up to $4,975 per family (or 2 percent of family income above the tax-filing threshold.

Fines are capped at the national average premium of the lowest-priced bronze exchange plan, and after 2016 they are to be based on the cost of living index.

Q. How are the fines enforced or collected?

A. Penalties can be deducted from your tax refund. The IRS cannot garnish your bank account or paycheck, put you in jail or otherwise enforce the penalty.

Q. How do I prove I had ACA-approved coverage this year?

A. When you file your 2014 tax return, you need to include documentation showing that you were insured for at least 10 consecutive months; or that you were eligible for an exemption.

Q. Who is exempt from paying the fine?

A. You may qualify for an exemption if:

  • You have financial hardship (the lowest priced bronze exchange plan costs more than 8 percent of the household income.
  • You are not a U.S. citizen, U.S. National, or lawful resident alien.
  • You had a lapse in coverage of less than three consecutive months during the year.
  • You are not required to file a tax return because your income is below the filing threshold ($10,000/individual; $20,000/filing jointly).
  • You do not qualify for Medicaid in a state not expanding the program.
  • You are part of a health care sharing ministry or belong to a recognized religious sect (objecting to health insurance).
  • You are a member of a federally recognized Indian tribe.
  • You are incarcerated.
  • You experience bankruptcy, homelessness, death of a family member, significant medical debt, disasters affecting property, or threat to sustenance or shelter.

Q. What about plans that have been in force before the ACA was implemented?

A. Last fall, the White House implemented a “transitional relief policy” which allowed non-grandfathered/non-ACA plans to be extended through this year. Earlier this year, the policy was extended for possible renewals as late as 2017. (This depends on the acceptance by each state’s insurance commission.)

Keep in mind that if your non-ACA plan is definitely ending in 2014, that qualifies you for a special enrollment period, during which time you can enroll in an ACA-approved plan and/or apply for a premium tax credit (subsidy). If your plan is continuing past this year, you can still utilize a special enrollment period if you opt out of renewing your existing plan on its anniversary date.

I hope this has helped with some of your questions. You can always contact one of our experts for questions about enrollment, subsidies, or special enrollment periods. Or go to our web pages for more details on this and a whole lot more!


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