Under the Affordable Care Act, the law requires you and each member of your family to have qualifying health insurance, called minimum essential coverage, otherwise you will be subject to a penalty when you file your federal income tax return.
It is important to note that you may be exempt from the requirement to maintain minimum essential coverage, if certain conditions are met, and thus will NOT have to make a shared responsibility payment (penalty) when you file your federal income tax return.
You can obtain some exemptions only from the marketplace, others only from the IRS, and yet others from either the Marketplace or the IRS.
You can obtain Affordable Care Act exemptions under the ACA if any of the following apply to you for 2015 tax year:
• You are member of a recognized religious sect.
• You are a member of a health care sharing ministry.
• You are a member of a federally recognized Indian tribe.
• You have no federal filing requirement, because your household income is below the minimum threshold for filing a tax return.
• You have a short coverage gap (you went without coverage for less than 3 consecutive months during the year).
• Hardship – (a) You are experiencing circumstances that prevent you from obtaining coverage under a qualified health plan. (b) You do not have access to affordable coverage based on your projected household income. (c) You are ineligible for Medicaid solely because the state in which you live does not participate in Medicaid expansion under the Affordable Care Act. (d) You have been notified that your health insurance policy will not be renewed, and you consider the other plans unaffordable.
• No affordable coverage available – You cannot afford coverage because the minimum amount you must pay for coverage is more than 8% of your household income.
• Incarceration – You are in a jail, prison, or similar penal institution or correctional facility after the disposition of charges.
• Not lawfully present in U.S. – (a) A US citizen or resident who spent at least 330 full days outside of the US during a 12-month period. (b) A US citizen who is a bona fide resident of a foreign country or US territory. (c) Neither a US citizen or US national, nor an alien lawfully resident in the US.
Taxpayers whose gross income is below their applicable minimum threshold for filing a federal income tax return in the 2015 tax year are exempt from the individual shared responsibility provision and are not required to file a federal income tax return to claim the coverage exemption. However, if the taxpayer files a return anyway (for example, to claim a refund), they can claim a ACA coverage exemption with their return.
Taxpayers who are granted a ACA coverage exemption from the Marketplace will receive an exemption certificate number (ECN) from the Marketplace and will enter their ECN in Column C of Part I of Form 8965, Health Coverage Exemptions.
The primary objective of this article is to empower taxpayers to learn to do their own taxes. For detailed information on the Affordable Care Act, grab yourself a copy of “Doing Your Own Taxes is as Easy as 1, 2, 3” ($6.98) on TaxConnections.com.
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