Who is Exempt? Who Isn’t? Answering Questions About Affordable Care Act Rules

ACA questionsIt seems many of us are still a bit confused about some of the rules of the Affordable Care Act (ACA). For instance, just who is exempt from carrying ACA-approved health insurance?

What are the fines for not being insured? Here are some of the most common questions about penalties and exemptions I’ve been asked recently.

ACA Exemptions and Penalties — Q&A

Q. What is the penalty for being uninsured?
A. The tax penalty or fine is a percentage of your household income or a flat fee (whichever is greater). Penalties will change annually as follows:

> 2014: $95 per adult; $47.50 per child, up to $285 per family (or one percent of family income that is above the federal filing threshold of $10,150/single; $20,000/jointly).

> 2015: $325 per adult; $162.50 per child, up to $4,975 per family (or 2 percent of household income above the tax-filing threshold).

Penalties are limited or capped at the national average price of the lowest premium bronze marketplace plan. Beyond 2016, penalties will increase based on cost of living indexes.

Q. How are the fines collected?
A. If you are expecting a tax refund, the IRS can deduct an ACA penalty amount from your refund. However, your bank account or wages cannot be garnished, and you cannot be arrested or jailed!

Q. How does the IRS know I had approved coverage?
A. Attach documentation of your coverage with your tax return. If you had coverage for ten consecutive months during the tax year or qualified for an exemption, you won’t be charged a penalty.

Q. How do I qualify for an exemption?
A. You may be exempt due to:

> Financial hardship based on the cheapest bronze plan on the Connect for Health Colorado exchange, costing more than 8 percent of your annual household income.
> Not categorized as a United States citizen, U.S. National, or legal resident alien.
> Lapsed coverage less than 3 months in a row.
> Income below the tax-filing requirement ($10,000/individual; $20,000/joint filing).
> Non-qualification for Medicaid.
> Membership in a health care sharing ministry or a recognized religious sect (opposed to health insurance).
> Membership in a federally-recognized Indian tribe.
> Bankruptcy, death in the family, large medical debt, loss of property due to natural disaster, loss of support to food and shelter.

Q. What happens to plans that were grandfathered or in force prior to 2014?
A. Near the end of 2013, the White House approved a “transitional relief policy” allowing non-grandfathered/non-ACA plans to satisfy exemption status. Early in 2014, this ruling was extended further for possible renewals to 2017.

(While Colorado’s insurance commission accepted the extension offer, it’s up to the individual carrier to extend their plans.)

Non-ACA plans that are ending or are up for renewal in 2014 can make you eligible for a special enrollment period to enroll in a new ACA-qualified plan. This gives you the chance to benefit from “guaranteed acceptance” of pre-existing health conditions and to apply for a premium tax subsidy to lower your costs.

These are just a few of the most frequent questions I hear from friends and customers alike. Of course, you can always reach out to me or my team of ColoHealth Personal Advisors anytime for other questions about exemptions and penalties that may affect you and your family.

Share your questions with me!

  Date posted: Wednesday, July 16th, 2014
Category: Health Care Reform, Health Insurance

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