Will the ObamaCare Penalty Affect My 2014 Tax Return? Part IV

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Who is exempt from paying the Health Insurance Penalty for not being insured?

Just because you don’t have insurance doesn’t mean that you will have to pay the penalty.  The law provides many ways to be exempt from any potential fines due.  Since 2014 is the first full year of ObamaCare, the rules for claiming a personal exemption seem to be very lenient. Many of these were subsequently added after the computer difficulties and inconveniences experienced during the original rollout.

Here is a list of Affordable Care Act personal penalty exemptions for 2014:

  • If you are not required to file a return because you are below the threshold for filing a tax return.  (In English: you don’t make enough to file a return.)
  • If you are uninsured for less than 3 full months.
  • If the price of your insurance premiums exceeds 8% of your annual income.
  • If you are not legally in the United States.
  • If you are a member of a recognized health care sharing ministry.
  • If you are a member of a federally recognized Indian Tribe.
  • If you are eligible to receive services through an Indian Health Services provider.
  • If you are incarcerated. 
  • If you are an expatriate living outside of the U.S. for at least 330 days of the year.
  • If you are a resident of a U.S. territory (not living in D.C. or any of the 50 states).

Hardship exemptions can still exempt you from the penalties if you don’t fit into any of the above categories.  Hardship exemptions are those factors that would affect your ability to purchase health insurance coverage.  The following are considered valid circumstances affecting your ability to purchase health insurance coverage:

  • If your insurance provider dropped your 2014 plan during 2013.
  • If you had medical expenses you could not pay during the previous 24 months.
  • If you were ineligible for Medicaid because your state didn’t expand the program.
  • If you filed for bankruptcy sometime in the last 6 months.
  • If you had substantial property damage from fire, flood, or other disaster.
  • If you received a shut-off notice form your utility company. 
  • If you were evicted during the past six months or faced foreclosure or eviction.
  • If you were homeless during the year.
  • If you were a victim of domestic violence.
  • If you experienced the loss of a family member during the year.
  • If you had an unexpected expense increase from caring for a disabled, sick, or aging family member.
  • If you appealed a decision which later allowed you to enroll in a health insurance plan but were unable to do so while you waited for determination.