Did you go without health insurance for all or part of 2015? Maybe you’re exempt, meaning you don’t have to carry health insurance. If you aren’t sure, here’s an IRS exemption eligibility tool that can help!
Not that we want people to go without health insurance. On the contrary, HEAL California wants everybody to have health insurance! We want it to be easy and affordable for people to get great healthcare, instead of this crazy-complicated and expensive system we have now. HEAL California supports a whole other way of doing healthcare – Medicare for All.
But until we win that, there are some legal ways for a few people (like the Amish, the undocumented, and people in jail, etc.) to not have to purchase health insurance and avoid getting fined.
First, some background –
Why do US citizens have to buy health insurance? Because the Affordable Care Act included an Individual Mandate that each of us was responsible to buy health insurance, or be subject to financial penalties.
What is the Individual Mandate?
It is a requirement that US citizens obtain health insurance that meets the standard of “minimum essential coverage.”
What are exemptions? And do I qualify for one?
Exemptions fall into five main categories:
- Income- or Affordability-Related exemptions apply if the lowest-cost insurance available to you would cost more than 8.05% of your income or, if your earnings are so low that you don’t have to file an income tax return at all.
- Hardship exemptions, such as homelessness, eviction, foreclosure, domestic violence, natural disaster, medical expenses you couldn’t pay, etc.
- Membership-Based exemptions apply if you belong to a federally recognized Indian tribe, a healthcare-sharing ministry or a religious group that objects to all types of insurance (including Social Security and Medicare).
- Legal Status exemptions apply if you live abroad, are incarcerated, or are “unlawfully present” in the United States (i.e. undocumented).
- The Medicaid Expansion exemption: This is a key exemption (but it doesn’t apply to Californians). If you have a low income and live in a state that didn’t accept the Medicaid expansion, then you may be exempt. In California, we expanded Medi-Cal in 2013. That’s why Californians aren’t eligible for this exemption.
In 2015, these states have still not accepted the Medicaid Expansion: Alabama, Alaska, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Maine, Mississippi, Missouri, Montana, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming.
Conclusion: Note that some of these exemptions require special forms or actions on your part. (Nothing is easy.) See more specific IRS information about exemptions, and click here for an IRS exemption eligibility tool to see if you are exempt.
No Exemptions Apply? Now What?
Well, you may be on the hook for a penalty. How much? The costs go up every year, just like premiums. The penalties are higher in 2015 than in 2014, and will be higher in 2016 than in 2015. Here’s a link to fees for not being covered, by year (2014, 2015, 2016), from Healthcare.gov.
As for your individual situation, it’s a fairly complicated calculation if you have multiple family members with different insurance statuses or coverage gaps during the year.
That’s why you should discuss your particular situation with a qualified tax preparer. (See below)
If you are eligible for an exemption, you need to include IRS Form 8965 “Health Coverage Exemptions” with your income tax return.
A thought from the HEAL Team:
Now that the mandate to maintain health insurance is enforced by the IRS, everyday people and businesses are confronted with a huge – and absolutely unnecessary – administrative burden as part of their already crazy and complicated income tax filings. If you agree with us that health care should be universal, high quality, easy and affordable, instead of a hassle, join us. Together, we will win!
And by the way, don’t think the hassles stop here! Stay tuned for more on taxes and the ACA.
(Sorry, we have to make this disclaimer because we’re not attorneys or income tax specialists or anything like that.)
HEAL California makes no representations or warranties in relation to the information provided here, which we obtained from the IRS, TurboTax and other sources (see links, above). We at HEAL California are neither tax nor health insurance professionals. If you have any specific questions about your taxes or health insurance, you should consult a qualified tax professional and/or a licensed insurance agent.
Following are outstanding resources that we highly recommend if you need more information:
IRS: The-Individual-Shared-Responsibility-Provision
IRS: ACA-Individual-Shared-Responsibility-Provision-Calculating-the-Payment
And here are resources for help filing your income taxes, which could be free (depending on your income):
IRS: Free-Tax-Return-Preparation-for-You-by-Volunteers
Also, several income tax services allow you to use their online programs to file easy returns, if you search online for “free income tax help.” There may be more resources in your community, too!