IRS Publishes Guide to Health Coverage Exemptions

The Internal Revenue Service has issued a new one-page
publication with information about exemptions to the health coverage
requirements of the Affordable Care Act.

IRS Publication
, “Facts about Health Coverage Exemptions,” provides
information for taxpayers who qualify for and may claim an exemption from
minimum essential coverage so that they do not need to make individual shared
responsibility payments when they file their federal tax returns.

The Congressional Budget Office and
Congress’s Joint Committee on Taxation estimated in a report they
released last week that nearly 90 percent of the uninsured will be able to qualify
for an exemption from the individual mandate for getting health insurance

Those who are exempt include unauthorized
immigrants, who are prohibited from receiving almost all Medicaid benefits and
all subsidies through the insurance exchanges; people with income low enough
that they are not required to file an income tax return; people who have income
below 138 percent of the federal poverty guidelines (commonly referred to as
the federal poverty level) and are ineligible for Medicaid because the state in
which they reside has not expanded eligibility by 2016 under the option
provided in the ACA; people whose premium exceeds a specified share of their
income (8 percent in 2014 and indexed over time); and people who are
incarcerated or are members of Indian tribes, according to the report.

Approximately 23 million uninsured people
in 2016 will qualify for one or more of those exemptions, according to the CBO
and JCT report. Of the remaining 7 million uninsured people, they estimate that
some will be granted exemptions from the penalty because of hardship or for
other reasons.

“Among the uninsured people subject to the
penalty, many are expected to voluntarily report on their tax returns that they
are uninsured and to pay the amount owed,” said the report. “However, other
people will try to avoid payments. CBO and JCT’s estimates of the number of
people who will pay penalties account for likely compliance rates as well as
the ability of the Internal Revenue Service (IRS) to administer and collect the
penalty payments.

In addition to the publication on
exemptions, the IRS has also released Publication 5156,
“Facts about the Individual Shared Responsibility Payment,” an exemption chart, an IRS YouTube
entitled “Individual Shared Responsibilities –
Overview,” and a Web page with Questions and Answers on the Individual Shared Responsibility Provision to
provide more information.  We will post to our Web page in the Clint
Services Tab – Affordable Care Act     Have questions?  Call us at 800-362-2809