Timothy Kelly | September 25 2013 3:30 EDT
ForexTV.com (New York) by Timothy Kelly
As the October 1, 2013 "open enrollment" date approaches, many Americans will begin the task of exploring their healthcare insurance options under the Affordable Healthcare Act (AHA) or Obamacare. Those who do not comply are subject to penalty fees called the "Shared Responsibility Payment". For individuals, the deadline to comply with the new tax law (AHA was classified as a tax the Supreme Court of the United States) is January 1, 2014.
Unless otherwise exempted, citizens (excluding members of Congress) will be required by the AHA to carry health insurance. Non-compliance with AHA will result in a penalty to the individual or a fee known as the Individual Shared Responsibility Payment. Penalty fees will be collected through the IRS on an individual's tax return. The amount of the penalties, according to the tax law are as follows:
"The [penalty] fee in 2014 is 1% of your yearly income or $95 per person for the year, whichever is higher. The fee increases every year. In 2016 it is 2.5% of income or $695 per person, whichever is higher.
In 2014 the payment for uninsured children is $47.50 per child. The most a family would have to pay in 2014 is $285.
You make the payment when you file your 2014 taxes, which are due in April 2015."
In addition to the penalty fee, the offending individual will have to pay 100% of all costs of their health care. However, the Open Enrollment period extends until March 31, 2014. After the open enrollment period ends, individuals won't be able to get coverage through the Marketplace until the next annual enrollment period, unless they qualify for an exemption or extension. Penalty fees for 2014 will be due and payable with your Federal tax return by April 15, 2015.
Minimum Essential Coverage Threshold
To avoid the AHA penalty fee, individuals must be able to prove that they have a minimum amount of health coverage. This is defined by the AHA as:
The type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. This includes individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage.
Notable exceptions to the definition of Minimum Essential Coverage include: only for vision or dental care, workers' compensation, coverage for specific diseases or conditions, and medical discount only plans.
Exemptions from the payment
The AHA provides exemptions for certain individuals who qualify. Individuals must apply and receive approval for an exemption. If granted the individual will not have to pay the penalty fee. This is called an “exemption.”
According to the AHA you may qualify for an exemption if:
In addition, the law allows for other exemptions such as hardships. The AHA defines 12 conditions for "hardship exemptions". Individuals who can prove the circumstances of "hardship" (defined below) that affect their ability to purchase health insurance coverage, may qualify for a “hardship” exemption:
1.You were homeless.
2.You were evicted in the past 6 months or were facing eviction or foreclosure.
3.You received a shut-off notice from a utility company.
4.You recently experienced domestic violence.
5.You recently experienced the death of a close family member.
6.You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property.
7.You filed for bankruptcy in the last 6 months.
8.You had medical expenses you couldn’t pay in the last 24 months.
9.You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.
10.You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, you do not have the pay the penalty for the child.
11.As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace.
12.You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.
Application For Exemption
Individuals applying for exemption due to: coverage being unaffordable; membership in a health care sharing ministry; membership in a federally-recognized tribe; or being incarcerated:
There are two basic way to file:
If an exemption is granted on the ground of an individual's financial hardship (income too low)you may also qualify to buy catastrophic coverage through the Marketplace.
If you’re applying for an exemption based on: membership in a recognized religious sect whose members object to insurance; eligibility for services through an Indian health care provider; or one of the hardships described above:
If your income will be low enough that you will not be required to file taxes:
If you have a gap in coverage of less than 3 months, or you are not lawfully present in the U.S.:
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