Federal Taxes

Affordable Care Act

Affordable Care Act Infographic

What is the Affordable Care Act (ACA)? The ACA – or Obamacare – was passed in March 2010 in an effort to get more Americans covered by health insurance, to improve the quality of coverage, to make it easier to buy insurance, and to lower the cost of coverage. The ACA requires that most Americans carry health insurance. You and your family had until March 31, 2014 to get insurance, or you could face a penalty when you file your taxes.

Does the ACA require everyone to be insured? Most U.S. citizens and legal resident aliens must carry some form of health coverage. But: There are certain exemptions that can allow you and your family not to be required to be insured.

If you plan on seeking an exemption, depending on which exemption you plan to claim, you can either file the exemption with your tax return at the end of the year or the Healthcare Marketplace at any time.

Automatic ACA Exemptions

There are a few circumstances where you are automatically exempt you from being insured. If you meet the following requirements, you don’t have to file a claim of exemption.

  • You’re not required to file a federal tax return.
  • You’re a U.S. citizen living abroad for a calendar year, or at least 330 days within a 12-month period.

ACA Exemptions You Must File For

If you meet the requirements for an exemption, you’re not penalized for not having insurance. Here are the various exemptions that apply:

Short-term Coverage Gap: If you’ve went uninsured for less than three months in a row during the year, you won’t face a penalty. Even if you’re only covered one day in a month – like the last day of the month – it counts for the whole month. You can claim this exemption on your return.

Not a U.S. citizen or resident alien: You’re not required to have health insurance. You can claim this exemption on your return.

You are incarcerated. If you are incarcerated in a prison, jail, or other correctional institution after having been sentenced, you’re exempt from having health insurance. You can claim this exemption on either your return or the Healthcare Marketplace.

Enrolled member of federally recognized American Indian or Alaskan Native tribe: You’re enrolled in a qualified Indian healthcare benefit. You can claim this exemption on either your return or the Healthcare Marketplace.

Religious Objections: If you and your family are members of a qualified religious sect whose teachings and beliefs oppose private and public insurance, you may be exempt from carrying health insurance. The religious sect must have been established by December 31, 1950. The members must have provided for the reasonable medical needs of dependent members for a good portion of the year. You can claim this exemption on the Healthcare Marketplace.

Member of a Healthcare Sharing Ministry: If you are member of a healthcare sharing ministry, you may eligible for an exemption. However, you must meet all the following requirements:

  • The ministry is a tax-exempt non-profit organization.
  • The ministry shares a common ethical or religious beliefs on sharing medical expenses among members.
  • You must remain a member of the ministry after you receive medical care.
  • The ministry or its predecessor must have been establish before December 31, 1999.
  • The ministry must have an annual audit by an independent certified public accounting firm.

You can claim this exemption on your return or on the Healthcare Marketplace.

There are other ways to claim an exemption. See Hardship Exemptions for the ACA.

See also:
What Counts as Minimum Coverage?
Penalty for the Uninsured
Getting Help Paying for Insurance
Insurance Cost Calculator
Penalty Calculator
Taxpayer FAQs
Employer FAQs