Affordable Care Act
What is the Affordable Care Act (ACA)? The ACA – or Obamacare – was passed in 2010 in an effort to get more Americans covered by health insurance, improve the quality of coverage, and make it easier to buy insurance. The ACA requires most of us to carry health insurance, or face a penalty when we file our taxes. (Tax Law Update: The penalty has been repealed beginning with tax year 2019, but is still in effect for 2018.)
Does the Affordable Care Act 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 excuse you and your family from being insured.
If you think you qualify for an exemption, you can either file the exemption with your tax return at the end of the year or on the Healthcare Marketplace at any time, depending on which exemption you plan to claim.
Automatic Affordable Care Act Exemptions
A few circumstances automatically exempt you from being insured. You don’t have to file a claim of exemption if:
- 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.
Affordable Care Act Exemptions You Must File For
If you meet the requirements for an exemption that is not automatic, you must file for it. Here are the exemptions that require you to file:
Short coverage gaps: If you were uninsured for less than three months in a row during the year, you qualify for an exemption. 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.
Resident aliens and non-U.S. citizens: You’re not required to have health insurance, so you qualify for an exemption. You can claim this exemption on your return.
Incarcerated persons: If you are incarcerated in a prison, jail, or other correctional institution after having been sentenced, you qualify for an exemption. You can claim this exemption on either your return or the Healthcare Marketplace.
Enrolled members of federally recognized American Indian or Alaskan Native tribes: Being enrolled in a qualified American Indian healthcare benefit qualifies you for an exemption. 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.
Members of a healthcare sharing ministry: If you are member of a healthcare sharing ministry, you may eligible for an exemption. But you must meet all the following requirements:
- The ministry must be a tax-exempt non-profit organization.
- The ministry must share a common ethical or religious belief 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 established 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 Affordable Care Act.