IRS questions about health care exemption will mean more for 2014 tax return

mmeehan1@herald-leader.comMarch 31, 2014 

A stick and carrot system is at the core of the Affordable Care Act.

The carrot? People have access to health care.

The stick? If you don't sign up you pay a penalty.

The Internal Revenue Service has been designated as the enforcement arm of the act, so, as you're filling out your tax forms this year you may notice for the first time that there were questions about whether or not you have health insurance.

Luis Garcia, a spokesman for the IRS, said while the questions on are this year's forms for most people the ACA will have no impact on their 2013 tax return.

But when it comes time to file for 2014, everybody will need to show they have health insurance, apply for an exemption or pay a fine.

Here are some questions and answers from the IRS and what exemptions are and how to file for one.

Are the rules the same in every state?


What are the exemptions?

There are 14 hardship exemptions including homelessness, eviction, death of a close family member, bankruptcy, domestic violence and experiencing a disaster "natural" or "human caused". But there is also a catch all — "another hardship in obtaining health insurance."

You can also file for an exemption if you are:

■ Unable to find a plan that costs less than 8 percent of your income.

■ Not required to have a tax return because your income is too low.

■ A member of a federally recognized tribe or eligible for services through and Indian Health Services provider.

■ A member of a recognized health care sharing ministry

■ A member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare

■ Incarcerated.

■ Living in the United States illegally.

How do I obtain an exemption?

According to the IRS website currently the only way to obtain an exemption is to download and print out an exemption form through The forms must be filled out and mailed to a processing center.

To obtain most of the exemptions, some documentation —such as proof of income — is required. For example, if you are a member of a religious sect with objections to insurance you have to provide the name of the organization, the address and the date you joined the organization.

The exemptions for lack of affordable coverage, a short coverage gap, certain hardships, household income below the filing threshold and individuals who are not lawfully present in the United States, may be claimed only as part of filing a federal income tax return.

What is the penalty if I don't file an exemption?

Formally called the "shared responsibility payment," the fee is 1 percent of your yearly income or $95 a year per person in your household, whichever is higher.

The fee increases every year. In 2016 it is 2.5 percent of your income or $695 per person, whichever is higher.

Parents are responsible for paying the fee if their children don't have insurance. The penalty for a child not covered in 2014 is $47.50 per child.

What if I don't pay the fee?

The IRS will hold back the fee out of any future tax returns.

Do I need to be covered for the entire year of 2014 to avoid a penalty?

No. As long as you enroll in a Marketplace plan by March 31, you won't have to pay the penalty for any months you were uncovered.

Where can I learn more?

Go to HealthCare.Gov/Exemptions.

Mary Meehan: (859) 231-3261. Twitter: @bgmoms. Blog:

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