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Treasury Issues Obamacare Exemption Fact Sheets

by Mike Godfrey, Tax-News.com, Washington

22 March 2016


The US Treasury Department has issued a series of fact sheets on the exemptions available from the Affordable Care Act (ACA) health insurance coverage requirement, if individuals can not afford coverage or meet other conditions, and about how to claim an exemption during tax filing.

During the current tax filing season, the Treasury is again reminding consumers of the changes they are seeing on their tax returns related to their health coverage. Consumers have questions about these changes and the Administration is committed to providing information and tools to help them understand the requirements.

Within the provisions of the ACA, most Americans are required to maintain "minimum essential" health insurance coverage, and employers are encouraged to offer that health coverage. Those individuals and employers who do not comply with these mandates – the "employee mandate" and "employer mandate" – are to make "shared responsibility" payments, or tax penalties, to the Internal Revenue Service (IRS).

For individuals, the tax penalty in 2015 was equal to USD325 (plus additional amounts for dependents) or two percent of their taxable income up to the average national cost of getting basic insurance coverage, whichever is the greater. From 2016 onwards, the calculation will be USD695 or 2.5 percent.

It is seen to be important for individuals to know that a variety of exemptions are available and to understand the steps they need to take to request them. Most can be claimed on their tax returns, but some exemptions are only available through the Health Insurance Marketplace.

To find out if an individual qualifies for an exemption, he or she may use the IRS interactive tool: "Am I Eligible for a Coverage Exemption or Required to Make an Individual Shared Responsibility Payment?"

For example, a taxpayer may be exempt from the requirement to have health coverage if the cost of coverage is too high as a share of his or her income – if it represents more than 8.05 percent of household income in 2015, increasing to 8.13 percent in 2016.

TAGS: individuals | compliance | Insurance | tax | tax compliance | law | insurance | Internal Revenue Service (IRS) | ministry of finance | tax authority | health care | legislation | United States | penalties | Health Insurance

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