There are already greater than a dozen causes folks can use to keep away from paying the penalty for not having medical insurance. Now the federal authorities has added four more “hardship exemptions” that permit folks off the hook if they’ll’t discover a market plan that meets not solely their protection wants but additionally displays their view if they’re against abortion.
It’s unclear how vital the influence can be, coverage analysts mentioned. That’s as a result of the penalty for not having medical insurance can be eradicated beginning with tax yr 2019, so the brand new exemptions will principally apply to penalty funds this yr and within the earlier two years.
“I think the exemptions … may very marginally increase the number of healthy people who don’t buy health insurance on the individual market,” Timothy Jost, emeritus professor of regulation at Washington and Lee University in Virginia who’s an skilled on well being regulation.
Under the brand new guidelines, folks can apply for a hardship exemption that excuses them from having to have medical insurance in the event that they:
Live in an space the place there aren’t any market plans. Live in an space the place there is only one insurer promoting market plans. Can’t discover an inexpensive market plan that doesn’t cowl abortion. Experience “personal circumstances” that make it troublesome for them to purchase a market plan, together with not having the ability to discover a plan of their space that provides them entry to specialty care they want.
The first new exemption isn’t related for shoppers this yr. Since the Affordable Care Act’s marketplaces opened, there have been no “bare” counties that lack insurers.
However, in about half of the U.S. counties — through which 26 % of enrollees stay — there is just one market insurer this yr, according to the Kaiser Family Foundation. (Kaiser Health News is an editorially unbiased program of the inspiration.)
As for the abortion exemption, in lots of locations it received’t be a problem both. Women in 31 states didn’t have entry to a market plan that coated abortion in 2016, in line with a Kaiser Family Foundation evaluation. Still, just a few states — California, New York and Oregon — usually require abortion protection of their market plans, and ladies who stay there may need hassle discovering a plan that excludes that protection, specialists mentioned.
The ACA established a number of various kinds of exemptions from the penalty for not having protection. Among them are exemptions for not having the ability to discover protection that’s thought of inexpensive or being with out insurance coverage for lower than three consecutive months in a yr. People declare these extra frequent exemptions when they file their tax returns.
Hardship exemptions that had already been on the books protected individuals who confronted eviction, filed for chapter or racked up medical debt, amongst different difficulties. Consumers apply for these exemptions by submitting an utility to the ACA insurance coverage market.
The new hardship exemptions apply to folks in all 50 states, in line with an official on the federal Centers for Medicare & Medicaid Services, which oversees the well being regulation’s insurance coverage marketplaces. To apply, folks usually want to supply a short clarification of the circumstances that made it a hardship for them to purchase a market plan, together with any obtainable documentation, once they submit their utility to market officers. They can apply for the present calendar yr or going again two years, to 2016.
It’s troublesome to gauge how many individuals will attempt to benefit from the adjustments, mentioned Tara Straw, a senior coverage analyst on the Center on Budget and Policy Priorities.
“People aren’t sure how to apply or if they’re eligible, and that discourages them from applying,” Straw mentioned.
The penalty for not having health insurance in 2018 is the larger of $695 or 2.5 % of family revenue.
During the 2017 submitting season, there have been greater than 106 million tax returns reporting that every one members of the family had medical insurance, and practically 11 million tax returns that claimed an exemption from the requirement to have it, according to a report from the Treasury Department’s inspector basic for tax administration. In addition, greater than four million returns reported paying penalties totaling practically $three billion for not having medical insurance.
People typically don’t notice they might owe a penalty till it’s time to do their taxes, mentioned Alison Flores, a principal tax analysis analyst at H&R Block’s Tax Institute. H&R tax preparers first work to see if shoppers can qualify for an exemption that may be claimed on their tax returns. If that doesn’t work, they transfer on to the hardship exemptions. The preparers assist folks get the hardship exemption utility, but it surely’s as much as shoppers to ship it to the marketplace and get the exemption certificates.
The federal steerage in regards to the new exemptions was launched April 9, shortly earlier than the tip of the revenue tax submitting season. People who’ve already filed their taxes and qualify for the brand new exemptions for 2016 or 2017 and get market approval can file an amended tax return to obtain a refund of any penalty they paid, mentioned Katie Keith, a well being coverage marketing consultant who writes regularly about well being reform.
“You have to really be motivated,” Keith mentioned.
Kaiser Health News (KHN) is a nationwide well being coverage information service. It is an editorially unbiased program of the Henry J. Kaiser Family Foundation which isn’t affiliated with Kaiser Permanente.