Health care law’s insurance mandate comes with plenty of exemptions

03/25/2014 12:39 PM

08/08/2014 10:23 AM

The deadline for most people to sign up for health insurance and avoid a tax penalty under the Affordable Care Act is Monday, now less than a week away.

But those who meet certain criteria might not have to pay a tax penalty, according to the Centers for Medicare and Medicaid Services.

Some of the hardships include:

• If you are facing facing eviction or foreclosure;
• If you recently experienced domestic violence;
• Or if you have had difficulty in getting health insurance.

“The list of criteria in order to apply for the exemption has grown considerably from the original narrative in the legislation,” said Karen Vines, vice president for benefits at IMA of Kansas, a retail insurance broker.

“Part of that was due to things that occurred last fall, not only with the marketplace challenges when it opened but the nonrenewal situation for a lot of individual policies out there.”

Some of the hardship criteria, like homelessness, are common sense, Vines said, while others are motr unexpected or unclear.

“‘Receiving a shut off notice from a utility company.’ Is it a one-time event or ongoing situation? There’s not too much of a qualifier there,” Vines said.

“Some are a little broad. ‘If you had medical expenses you couldn’t pay in the last 24 months.’ You couldn’t pay or didn’t pay? A lot of the criteria could potentially be pretty easy to qualify for.”

Experiencing domestic violence is also a category, but no documentation is required to submit with an application for hardship. Those who have lost a close family member – another exemption – can submit a copy of the death certificate or death notice from a newspaper.

“It can send a little bit of a mixed message. On the one hand, you need certain pathways for people in certain situations or circumstances to not incur the penalty for not having health insurance,” but people also should know there is a tax consequence if they don’t have hardships and documentation, Vines said.

The exemption that could affect the greatest number of Kansans is the one for people who are determined ineligible for Medicaid because the state didn’t expand the program, said Josh Lauber, navigator and patient care coordinator at the Center for Health and Wellness, 2707 E. 21st St.

The biggest concern for people who come in to speak with Lauber and other navigators is that they will be penalized if they don’t get health insurance even though they don’t think they can afford it, he said.

“We reassure families about the process and that if they really can’t afford something – if it’s over 8 percent of their income – they’re not going to be taxed because they can’t afford it,” Lauber said. “They know there is a tax, but they’re not familiar with the exemptions and the process.”

Those who think they have a hardship must fill out an application and submit it to the federal government along with documentation. If accepted, they will receive a code that they can put on tax forms next year, Lauber said.

Monday is also the deadline to have paid the first monthly premium for coverage, which will begin on May 1 for new consumers.

Juven Nava, outreach and eligibility supervisor and navigator at GraceMed, says that the computer glitches that plagued HealthCare.gov when it started in November have been mostly resolved.

More than 29,300 Kansans signed up for coverage on HealthCare.gov between October 1 to March 1, according to the Department of Health and Human Services.

The federal government estimates there are more than 65,000 Kansans eligible for coverage on the marketplace and that about 36,000 of those people would qualify for some form of financial assistance to help pay for their health plan.

Tax penalties

If people don’t sign up for insurance by Monday, penalties will be assessed on tax forms filed in 2015 for tax year 2014, Vines said.

The penalty is $95 per adult and $47.50 per child (up to $285 per family) or 1 percent of the family income, whichever is greater, for 2014, according to the proposed rules on the IRS website.

That increases in 2015 to $325 per adult, $162.50 per child (up to $975 per family) or 2 percent of family income, whichever is greater.

For 2016 and beyond, the penalty increases to $695 per adult and $347.50 per child (up to $2,085 per family) or 2.5 percent of family income, whichever is greater.

After Monday, the next enrollment period to sign up for insurance coverage at HealthCare.gov will start Nov. 15.

However there are exceptions to that as well. If a person experiences a major change in circumstances – for example, a job loss, a new child or a divorce – they will able to enroll outside of the regular enrollment period.

Other exemptions

Other criteria people can claim to avoid paying a tax penalty for being without insurance include:

• Religious beliefs that conflict with the law.
• No affordable insurance coverage available.
• Member of federally recognized Indian tribes.
• Falling below the minimum threshold of income for filing a tax return.
• Going without coverage for less than three consecutive months in a year.
• Incarcercation.
• Being unlawfully present in the U.S.

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