The Affordable Care Act (ACA) was designed to make sure everyone purchased minimum essential health insurance by March 31, 2014 and imposes a tax penalty for those who were required to purchase health insurance, but did not. Come tax time, most Americans will have to answer a simple yes or no question on their tax return to prove they have health coverage. In some cases, taxpayers may be exempt from purchasing health insurance and a tax penalty
There are many reasons you might use to be exempt from the penalty for not having insurance when you file your 2014 taxes in 2015 and they cover a variety of scenarios.
You can check to see if you’re exempt from the tax penalty by checking the TurboTax Exemption Check, a free, online tool that let’s uninsured Americans determine whether they are eligible to waive the tax penalty entirely and apply for an exemption.
According to TurboTax data, the top five exemption categories are:
- I can’t afford health insurance. The lowest-priced coverage available costs more than 8 percent of my household income
- I had difficulty signing up for health insurance through a state or federal marketplace
- I had medical expenses that I couldn’t pay in the last 24 months that resulted in substantial debt
- I had an individual insurance plan cancelled, and other marketplace plans are unaffordable
- I received a shut off notice from a utility company
Other exemptions are given to those who have recently experienced foreclosure, bankruptcy, the death of a close family member or an experience with domestic violence.
To get the exemption, you will have to apply for an exemption through the Health Insurance Marketplace well before tax-time since the Marketplace has to approve your application and you need to provide documentation to verify your claim. Each exemption is different, so be sure to apply with the right form. Once approved, the Marketplace will issue an exemption certificate number that is required when you file your taxes.
Approval of your exemption may take a couple of weeks, so apply for your exemption as soon as you can to make it easy to file your taxes.
If you are not exempt under the Affordable Care Act, a tax penalty will be assessed when you file your 2014 taxes. The exact amount is based on family size and household income, and increases each year. Specifically for 2014, the penalty is $95 per adult or one percent of income, depending on your income.
2015 Open Enrollment
If you are looking ahead at health coverage for 2015, open enrollment begins this November 15th.