As of the 2015 tax season (for 2014 returns), tax returns began including information on Medicare . For most insured Americans, the IRS cover is a very simple process, and involves checking a box stating that they have had coverage during the year. This applies to anyone who has Medicaid, Medicare, employer-sponsored health insurance, or individual market coverage (including stock market and over-the-counter coverage, with grandmothers and grandfather plans.
But what if you did not have health insurance? There is a tax penalty for not having coverage but people without coverage are actually more likely to be eligible for an exemption from the penalty than to be subject to the penalty . In January 2016, the IRS reported that 7.9 million taxpayers were subject to the non-insurance penalty in 2014, while 12.4 million tax filers claimed an exemption from the penalty. Similarly, the IRS reported in January 2017 that for the 2015 fiscal year, 6.5 million taxpayers were subject to the penalty, while 12.7 million applicants claimed an exemption ( the total uninsured rate fell from 2014 to 2015). the total number of declarants not having insurance in 2015 was lower).
How can I get a penalty?
The IRS grants you exemptions when you file your taxes; some exemptions come from the exchange; some can be obtained anyway. Here is a summary of the IRS .
If you request an exemption from the exchange and you benefit from it, the exchange will send you an exemption certificate number (ECN) that you will use to complete Part 1 of the form 8965 when you file your taxes.
If possible, ask for an exemption from the exchange well before filing your taxes, so that you have the ECN at the time you file (or, if the exemption is denied, you will know it before depositing your taxes). But if you have not received your ECN by the time you file your tax return, you can write "Pending" on the 8965 form in Column C where the ECN would go.
If you are applying for an exemption directly from the IRS, you will simply have to complete Form 8965 (Part 2 or 3) and file it with your tax return.
Exemptions you get from the exchange
Exemption from hardship
Coverage is considered unaffordable based on your projected income for the coming year (the exemption based on your actual income at the end of the year may be claimed instead in your tax return. income). For 2018, the coverage is considered unaffordable if your premiums (after all available subsidies are applied) for the cheapest bronze plan in the exchange would be more than 8.05% of the income of your household.
You would have been eligible for Medicaid (because your household income is less than 138 percent of the poverty level), but have been found to be ineligible solely because your state has not extended Medicaid.
You volunteer with AmeriCorps, VISTA or the National Civilian Community Corps, with a short-term plan through the volunteer organization. (Short-term coverage is not considered essential minimum coverage and would normally result in a penalty.) Volunteers in these programs are also entitled to special registration periods to obtain a blanket Obamacare at the beginning or end of service.
Exemptions that you get from the IRS when you file taxes
You had a short coverage interval, no more than two months. ( For 2014 only the gap could be four months if you enrolled in a diet – including CHIP – before the end of open enrollments and you benefit from coverage as of May 1. If you are not exempt, the exemption for a coverage gap applies only to the first coverage gap you encounter during the year, if you are not insured for one month in April another month in September, you would pay a prorated penalty for the September gap).
The least expensive plan would have accounted for more than 8.16% of your household's real income (not projected) in 2017 (it will rise to 8.05% in 2018). You can get an exchange access exemption based on your expected income for the year. But to claim the exemption from the IRS, it will be based on the actual income that you report on your tax return after the year is over.
Your income is below the tax threshold (you are automatically exonerated from the penalty.) But if you are in a state that developed Medicaid you are probably eligible for free coverage ).
You are a resident of a state that has not developed Medicaid (note that a similar exemption is available from the exchange, if you apply for Medicaid and you are found to be ineligible due to lack of Medicaid expansion in your state).
You have lived entirely or mainly (at least 330 days of the year) outside the United States, or you are not legally present in the United States.
The cover is unaffordable for your household because of the family's mistake .
Exemptions granted by the Exchange or the IRS
The least expensive plan would have accounted for more than 8.16% of your household's income in 2017, or more than 8.05% of your household's income in 2018. As noted above, you can get this exemption from the tax credit. Exchange based on your expected income year, or the IRS when you file your taxes, based on your actual income.
You would have been eligible for Medicaid, but your state has refused to extend Medicaid (as stated above, you will get the IRS exemption based on your residence, or l & # 39; exchange based on your unsuccessful request for Medicaid).
You were enrolled in a shared health care ministry, described in 5000A (d) (2) (B) .
You are an American Indian or a native of Alaska. ( Additional beneficial provisions of the ACA apply however, and will likely be more useful than the penalty exemption.)
You were incarcerated.