The public debate over the Affordable Care Act (a.k.a Obamacare) continues to rage, despite the fact that the law has already kicked in.  While businesses have been granted an extension for complying with the law, individuals must be in compliance by having health insurance from the beginning of 2014 forward.

In this post we discussed the penalty called the individual responsibility payment; since many think it’s only $95 (hint: it could be more).  This penalty is assessed against a taxpayer who failed to obtain health coverage and was “required” to.  However, this penalty has a number of exemptions that will permit numerous people to avoid actually paying it.  Listed below are the three broad exception categories.

Hardship.  Examples of situations that apply to the hardship exemption include a recent bankruptcy, the death of a family member and having medical expenses you were unable to pay within the past two years.  Thus, if you’ve experienced a hardship that kept you from obtaining insurance, chances are you will qualify for the exemption.

Statutory Exemptions.   The penalty won’t apply if your income is too low to require you to file a tax return, or if you’ve been uninsured for less than three months out of the year.  You can also avoid the penalty if the lowest priced health insurance that is available to you would cost more than 8% of your income.  If you’re an expat, and not lawfully present in the United States, then the penalty also will not apply.

Exempt Persons/Groups.  Members of federally recognized Native American tribes, members of recognized health care sharing ministries, and members of recognized religious sects with religious objections to insurance are not required to obtain coverage.

With these extensive exemptions available, combined with the fact that the ACA prohibits the IRS from using it’s otherwise extensive collections authority to actually collect the penalty, it’s unclear how much of this penalty money the government will actually collect.  For a full list of exemptions available to you, check out this link.

If you need assistance with determining whether or not one of the exemptions applies to your particular situation, be sure to give us a call at 773-239-850 or shoot us an email at the address below.