How likely am I to be given an exemption to the ACA penalty?
January 19, 2016 11:42 AM Subscribe
I did not have health insurance for the last 8 months of last year. How likely am I to be granted an exemption to the penalty I'd normally face when it comes time to file my taxes?
At the beginning of last year I called my health insurance provider and asked if there was anything I needed to do keep my coverage active and to make sure I kept receiving the subsidy for my monthly premium. They informed me that there was nothing I needed to do, and I took their word for it. They were wrong. While my coverage continued into the new year with no issue, my subsidy did not. Unfortunately I didn't notice this until my provider charged me for 3 months of coverage at the end of March, for the full premium amount. By then I'd missed the deadline to re-enroll through the marketplace and to get my subsidy back, and since my premium was no longer anywhere near affordable, I canceled my health insurance plan at the end of April. I tried appealing with the state exchange (NY) and started a case with them, but it didn't seem to go anywhere.
Is there any kind of exemption I'd qualify for to spare me the hefty fine for being uninsured for most of the year?
At the beginning of last year I called my health insurance provider and asked if there was anything I needed to do keep my coverage active and to make sure I kept receiving the subsidy for my monthly premium. They informed me that there was nothing I needed to do, and I took their word for it. They were wrong. While my coverage continued into the new year with no issue, my subsidy did not. Unfortunately I didn't notice this until my provider charged me for 3 months of coverage at the end of March, for the full premium amount. By then I'd missed the deadline to re-enroll through the marketplace and to get my subsidy back, and since my premium was no longer anywhere near affordable, I canceled my health insurance plan at the end of April. I tried appealing with the state exchange (NY) and started a case with them, but it didn't seem to go anywhere.
Is there any kind of exemption I'd qualify for to spare me the hefty fine for being uninsured for most of the year?
Given that you were misinformed by your insurance company I think you have a good case for an exemption. There's more info about exemptions here. I'd recommend contacting the NY State Exchange again to see about your appeal -- they are legally required to process that appeal within a certain amount of time. You can also contact a health insurance navigator (not me, I live in Chicago!) to get in-person help and counseling for free on how to navigate getting an exemption.
MeMail me if you have other questions.
posted by tivalasvegas at 12:18 PM on January 19, 2016 [2 favorites]
MeMail me if you have other questions.
posted by tivalasvegas at 12:18 PM on January 19, 2016 [2 favorites]
Wait wait wait. You were re-enrolled in an Exchange plan, and the exchange wouldn't let you recalculate your tax credit amount?
Yeah. I think you have a case for an exemption based on their error as well. I'm not 100% on that because the rules may be slightly different for state-based exchanges (in my state, the federal government directly oversees the exchange). But that is my best guess.
posted by tivalasvegas at 12:29 PM on January 19, 2016
Yeah. I think you have a case for an exemption based on their error as well. I'm not 100% on that because the rules may be slightly different for state-based exchanges (in my state, the federal government directly oversees the exchange). But that is my best guess.
posted by tivalasvegas at 12:29 PM on January 19, 2016
Here are all of the reasons for exemption and whether you can claim it on your return or whether you need exemption documentation from the exchange (you can file your return with this documentation listed as "pending"). "Unable to renew existing coverage" is one of the self-reporting options; I'm not sure it would technically apply in your case, but it could. There's also an interactive tool for figuring out if you owe the penalty.
posted by melissasaurus at 2:29 PM on January 19, 2016
posted by melissasaurus at 2:29 PM on January 19, 2016
Worst case, the penalty is pro-rated for the number of months uncovered, so you would only pay 2/3 of the full penalty.
Regarding possible exemption, the most likely would be unaffordable coverage. If the price of the lowest cost bronze plan on your exchange minus any credits you would have received if you had applied for them is greater than 8% of you income, then you qualify for an exemption. Note that you have to assume that you would have received a subsidized price to determine unaffordability.
Mathematically, if you were eligible for a subsidy, it is unlikely that you would qualify for an unaffordability exemption for 8% of income. This is because with subsidies, you never pay more than 9% of income for a silver plan. And the unaffordability is based on the cheaper bronze plan.
To find out for sure you need to fill out the affordability worksheet here:
https://www.irs.gov/pub/irs-pdf/i8965.pdf
You will need this tool on affordability to fill out the worksheet:
https://www.healthcare.gov/tax-tool/
posted by JackFlash at 5:12 PM on January 19, 2016
Regarding possible exemption, the most likely would be unaffordable coverage. If the price of the lowest cost bronze plan on your exchange minus any credits you would have received if you had applied for them is greater than 8% of you income, then you qualify for an exemption. Note that you have to assume that you would have received a subsidized price to determine unaffordability.
Mathematically, if you were eligible for a subsidy, it is unlikely that you would qualify for an unaffordability exemption for 8% of income. This is because with subsidies, you never pay more than 9% of income for a silver plan. And the unaffordability is based on the cheaper bronze plan.
To find out for sure you need to fill out the affordability worksheet here:
https://www.irs.gov/pub/irs-pdf/i8965.pdf
You will need this tool on affordability to fill out the worksheet:
https://www.healthcare.gov/tax-tool/
posted by JackFlash at 5:12 PM on January 19, 2016
For future reference, you should have been able to receive your subsidy after the fact. The enrollment deadline is only for signing up for an insurance plan. You met that requirement by auto-re-enrollment. That deadline has nothing to do with changing the subsidy at any time during the year.
At any time of the year you can adjust your subsidy as your income goes up and down. All you have to do is log onto your exchange and report a change in income and your subsidy would be effective immediately. That might not help you for the first three months of the year that were already billed, but then you would get the excess payments back at the end of the year when you filed your taxes.
Sorry that it is too late now since you cancelled your insurance by not paying.
posted by JackFlash at 5:19 PM on January 19, 2016
At any time of the year you can adjust your subsidy as your income goes up and down. All you have to do is log onto your exchange and report a change in income and your subsidy would be effective immediately. That might not help you for the first three months of the year that were already billed, but then you would get the excess payments back at the end of the year when you filed your taxes.
Sorry that it is too late now since you cancelled your insurance by not paying.
posted by JackFlash at 5:19 PM on January 19, 2016
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The exemption kicks in if your premiums exceed 8% of your taxable income.
Call the hotline number posted at healthcare.gov and talk to people who do this as their job about your actual situation.
posted by phunniemee at 12:01 PM on January 19, 2016 [1 favorite]