What is an Obamacare Hardship Exemption?

Individual and Family

What is an Obamacare Hardship Exemption?

Published on April 18, 2018


The Affordable Care Act has an individual mandate. This requires most Americans to either have ACA-qualified major medical insurance or to pay a penalty. Taxpayers can void penalties by having major medical insurance for themselves and their families that meets the requirements of the ACA. People might buy individual policies, get group insurance at work, or even have coverage from the government to avoid fees.
The government intended to use these extra penalties for not enrolling in health insurance as an incentive to get people to buy coverage; however, the law also provides some Obamacare exemptions that can relieve many taxpayers of an unaffordable burden during times of financial stress.

Understanding Obamacare exemptions

People without health insurance could have to pay fees of up to 2.5 percent of income or $695 per adult for not having ACA-qualified health insurance for themselves and anybody else listed on their tax forms. The IRS will prorate these fees for portions of the year that family members lack coverage, and the government does not impose any penalties for lapses of two months of the year or less.
Typically, taxpayers find out if they have to pay these penalties when they fill out their federal tax forms each year. Tax filers also have the chance to find out if they and their families may qualify for one of several Obamacare exemptions that will keep them from having a higher tax bill.

Who qualifies for the hardship exemption?

According to the healthcare.gov, a hardship exemption is a special circumstance that may keep people from obtaining or keeping qualified major medical insurance. Lawmakers intended to have the individual mandate provide an incentive for people to enroll in major medical insurance. Still, lawmakers allowed for the hardship exemption, because they did not want to force people to have to choose between paying health insurance premiums or affording utilities, shelter, groceries, and other essentials.
Some examples of Obamacare exemptions include the following:

  • Such financial problems as facing foreclosure or eviction, getting termination notices from utility companies, or filing for a bankruptcy
  • Serious property damages or substantial medical bills
  • Ineligibility for Medicaid in a non-Medicaid-expansion state
  • Other approved special circumstances

In addition to federal Obamacare exemptions, like the hardship exemption, some states may also allow for additional affordability exemptions. The best way to learn more about qualifying for an affordability or hardship exemption is to find the applicable forms here.

Finding Obamacare and non-Obamacare health insurance plans

People who do or do not qualify for the hardship exemption may still need to find medical plans to help protect their families and ensure access to qualify medical care. At eHealth, it’s fast and easy to find a variety of coverage options with a quick ZIP code search. This search will uncover a wide variety of both ACA and non-ACA medical plans for you to choose from.

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