You hear people talking about the Affordable Care Act, or “Obamacare” everywhere these days. Obamacare will affect most of us from 2014 and beyond. We are going to discuss the Obamacare penalties and examine the exemptions to the law.
Starting in 2014 everyone (without an exemption) will be required to have health insurance. In 2014 if you don’t obtain insurance you will be fined $95 (per person) or 1.0% of your income, whichever is greater *(with a cap explained in the note below). In 2015, this penalty increases to the greater of $325 or 2.0% of an individual’s annual income. In 2016 the penalty jumps to $695 per person or 2.5% of income. Beyond 2016, the fines will be indexed to the cost of living.
Note: the maximum annual penalty for all years is capped at three times the minimum penalty. An example – if you earn $30,500 in 2014, 1.0% of your income would equal $305 but the penalty is capped at $285 (3 times $95). These fines/penalties are due with an individual’s federal income tax return. So an Obamacare penalty for 2014 would generally be due by April 15, 2015.

An individual/taxpayer may qualify for an exemption to Obamacare if:
1. The taxpayer is uninsured for less than 3 months of the year;
2. The lowest-priced coverage available to costs more than 8% of an individual’s income;
3. The individual/taxpayer is not required to file a tax return because income is too low;
4. The taxpayer is a member of a federally recognized tribe or eligible for services through an Indian Health Services provider;
5. The taxpayer is a member of a recognized health care sharing ministry;
6. The taxpayer is a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare;
7. The individual is incarcerated, and not awaiting the disposition of charges against them; and
8. The individual is not lawfully present in the U.S.
Hardship Exemptions
An individual may qualify for a hardship exemption if:
1. The individual is homeless;
2. The taxpayer was evicted in the past 6 months or were facing eviction or foreclosure;
3. The individual received a shut-off notice from a utility company;
4. The taxpayer recently experienced domestic violence;
5. The taxpayer recently experienced the death of a close family member;
6. The taxpayer experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property;
7. The taxpayer filed for bankruptcy in the last 6 months;
8. The taxpayer had a medical expenses they couldn’t pay in the last 24 months;
9. The taxpayer experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member;
10. The taxpayer 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, they do not have the pay the penalty for the child;
11. As a result of an eligibility appeals decision, The taxpayer is 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 they weren’t enrolled in a QHP through the Marketplace; and
12. The taxpayer was determined ineligible for Medicaid because their state didn’t expand eligibility for Medicaid under the Affordable Care Act.