Part 7 of a 7-part series
Exemptions Galore!

General exemptions from non-compliance penalties


According to the Affordable Health Care Act website (healthcare.gov), you may qualify for an exemption from ACA insurance plans if you are:

  1. Uninsured for less than 3 months of the year;
  2. At an income level whereas the lowest-priced coverage available to you would cost more than 8% of your household income;
  3. Exempt from filing a tax return because your income is too low;
  4. A member of a federally recognized tribe or eligible for services through an Indian Health Services provider;
  5. A member of a recognized health care sharing ministry;
  6. A member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare;
  7. Incarcerated and not awaiting the disposition of charges against you; and
  8. Not lawfully present in the U.S.

There are other types of exemptions as well that fall under the title of “hardship.” For instance, if your income is less than 133% of the federal poverty level, you will be relieved of the non-compliance penalty. Here is a list of those qualified exemptions.

Hardship Exemptions from non-compliance penalties

You may qualify for a hardship exemption if you:

  1. Are homeless;
  2. Were evicted in the past 6 months or were facing eviction or foreclosure;
  3. Received a shut-off notice from a utility company;
  4. Recently experienced domestic violence;
  5. Recently experienced the death of a close family member;
  6. Experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property;
  7. Filed for bankruptcy in the last 6 months;
  8. Have medical expenses you haven’t been able to pay in the last 24 months;
  9. Experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member;
  10. Claim a child who’s been denied coverage in Medicaid and CHIP as a tax dependent, and another person is required by court order to give medical support to that child. If this is the case, you do not have to pay the penalty for the child;
  11. Won an eligibility appeals decision and are now eligible for: enrollment in a qualified health plan (QHP) through the Marketplace; lower costs on your monthly premiums; or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace; and
  12. Are ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.

Exemption Loopholes

Let’s face it, the minute laws are passed, there are clever strategies put in place by dishonest individuals seeking to avoid those laws. Consider hardship exemption number three. A person could delay payment to their utility company, receive a shut-off notice, pay their bill before their service is disconnected, and use the shut-off notice to apply for a hardship exemption.

Right now, neither utility shut-off notices nor service interruptions affect a person’s credit score. One could only imagine though that if tons of people begin using and abusing this exemption opportunity, Congress would perhaps pass a law requiring utility companies to report all shut-off notices to the credit bureau.

Then there’s exemption number eight. A person could go to the doctor or hospital, incur a medical expense not covered by insurance, and not pay it. Sure, this would affect that person’s credit score, but how would the federal government determine if that person’s reason for nonpayment was actually due to financial inability? Will they begin assessing tax returns or audit one’s household cash flow for the previous two years?

Where does it all end?

In conclusion, regulation often begets more regulation. Has the current administration already considered all the possible scams that will arise to avoid ACA penalties? Are more regulations already underway to penalize people for avoiding the penalties?

The ACA, as it stands today, cannot possibly be a complete legislation simply due to the necessity of staying ahead of fraudulent acts like the few examples covered here. There would have to be a massive expansion in federal government employment to properly monitor the tremendous amount of ever-changing rules and regulations for over 316 million Americans! Oh well, that would be a good start to lowering the unemployment rate.

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