Under current law, most people are required to have “minimum
essential coverage” through an employer, a government health program or a
health plan they purchase themselves. Those who do not have health insurance in
2018 will pay a tax penalty. Starting with year 2019, the tax penalty no longer
applies. Some people qualify for an exemption from this requirement, and they
do not have to obtain health insurance or pay a tax penalty in year 2017 and
2018.
For tax year 2017 and 2018 When you file your income tax return,
you will have to enter information about your health insurance coverage (or an
exemption). If you do not maintain minimum essential coverage during the year
and do not qualify for an exemption, you will pay a tax penalty to the Internal
Revenue Service on your tax return for that year. (Again, starting with year
2019, this no longer applies). Changes enacted in January 2018 as part of
changes to federal tax law will eliminate the tax penalty in the future, but
those changes do not go into effect until the 2019 coverage year.
The annual penalty is the greater of:
· $695
for each adult and $347.50 for each child, up to $2,085 per family.
· 2.5
percent of the tax filer’s annual household income minus the federal tax filing threshold.
So, let’s explore the Exemptions from the Tax Penalty one by
one.
The following groups qualify for an exemption to the tax
penalty:
· No tax
filing requirement. People whose income is below the minimum threshold for filing
a tax return. The requirement to file a federal tax return depends on YOUR
filing status, age and types and amounts of income. You can use the Internal
Revenue Service’s Interactive Tax Assistant (ITA) to find
out if you are required to file a federal tax return.
· Short
coverage gap. Consumers who go without coverage for less than three
consecutive months during the year –are exempt from the penalty.
· Hardship.
Consumers who have experienced difficult, financial or domestic circumstances
that prevent them from obtaining coverage — such as homelessness, the death of
a close family member, bankruptcy, substantial recent medical debt or disasters
that substantially damage a person’s property, also qualifies as an exemption.
· Unaffordable
coverage options. Consumers who can’t afford coverage because the lowest-priced
coverage available to them would cost more than 8.16 percent of their annual
household income- are exempt from the penalty. For Covered California, the
lowest-cost plan would be the lowest-cost Bronze plan available to the
individual.
· Incarceration. Consumers
who are in a jail, a prison or a similar penal institution or correctional
facility after the disposition of charges (or judgment) against them- are
exempt from the penalty.
· Not
lawfully present. Consumers who are not U.S. citizens, U.S. nationals or lawfully
present in the United States are not subject to the tax penalty.
· Religious
conscience. Members of a religious sect or division thereof that has been
in existence at all times since Dec. 31, 1950, and is already recognized by the
Social Security commissioner as opposed to accepting any insurance benefits,
including Social Security and Medicare- are exempt from the tax penalty. The
Social Security Administration administers the process for recognizing these
sects according to the criteria in the law.
· Health
care sharing ministry. Members of a recognized health care sharing ministry are also
exempt from the penalty.
· American
Indian tribes. Members of a federally recognized American Indian tribe, or
those who are eligible for services through an Indian Health Services provider
do not have to pay the tax penalty and therefore exempt.
Exemption applications are now available from the federal
government. For more information and links to the application, visit www.healthcare.gov/exemptions or call the
federal marketplace at (800) 318-2596. Individuals over the age of 30 who have
certificates of exemptions must purchase their catastrophic plan directly
through a carrier.
If you have questions or comments, feel free to share your
thoughts by commenting under my video on youtube. We welcome likes, shares and new
subscribers! As always, thank you for watching!
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