People who were not insured by a government approved plan in 2016, 2017 and 2018 now have more available ways to escape Affordable Care Act fines. Four new exemptions have been added to already existing ones for these years, meaning taxpayers may be able to recoup past fines and avoid paying one this year.

 

Required Coverage

The Affordable Care Act of 2009 mandated insurance coverage for individuals. In the past, people could risk not having coverage with no government-related penalty, but this practice led to expensive, uncovered treatment that increased medical costs for everyone. In an effort to make health care affordable for all Americans, fines were approved for those who chose not to buy qualified insurance coverage, and this money helped pay for health care subsidies for Public Exchange users.

 

Fines

If a United State citizen opted out of ACA qualifying health care coverage, either privately acquired or purchased through the Health Care Exchange, they were subject to a penalty equal to 2.5 percent of the household income or $695 per adult, whichever was higher. A number of exemptions have always been available for those who had limited access to plans or who simply couldn't afford the plans that were available.

 

New Exemptions

Four more hardship exemptions have been added for this year and the past two years. None of the hardship exemptions will be relevant in 2019 since the penalty for being uninsured will be dropped due to tax legislation passed in 2017. The new exemptions are as follows:

• No ACA Public Exchange plans available in your area. This exemption is essentially meaningless since all counties in the United States have access to at least one Public Exchange plan.

• One insurer selling Public Exchange plans. Approximately half of the nation's counties have access to only one insurer selling these policies. Since the insurer faces no competition, the law now frees people in those counties from paying the no-insurance penalty if they opt out of coverage.

• No affordable Public Exchange plan that doesn't include abortion coverage. This exemption is aimed at people morally opposed to abortion, but will have minimal effect since 31 states in 2016 didn't offer Public Exchange plans that covered this medical procedure. Only states like California, New York and Oregon require abortion coverage in most of these plans, so few people nationally will be eligible for this exemption.

• The need for specialty care not covered in Public Exchange plans. A few people will be eligible for an exemption because they have “personal circumstances” that these insurance plans cannot address. Experts feel the new exemptions will not greatly increase the number of healthy people who will be free from paying the ACA fine. Many people are unaware of these changes and don't understand the process for getting an exemption. However, tax specialists can advise their clients on this matter, whether in person or through their online services.

The ACA is changing, and the no-insurance penalty is being dropped in 2019. However, some taxpayers are exempt from paying the fine in 2016, 2017 and 2018 due to four new exemptions. These new rules will allow some people to file amended returns for these past years and recover the fines they paid then. Tax specialists can best advise their clients on whether the new rules affect them and how to proceed if they do. Visit the IRS site to see ALL of the possible exemptions.

 

Sources

https://www.healthcare.gov/why-coverage- is-important/the- fee-for- no-coverage/
https://www.npr.org/sections/health-shots/2018/04/24/605007498/4- new-exemptions- to-the- tax-penalty- for-lacking-health- insurance