The Affordable Care Act’s individual mandate requires all U.S. residents to have health insurance or pay a penalty called the shared responsibility payment. However, if you get a health insurance exemption, you can go without health insurance and you won’t owe the shared responsibility payment.
Health insurance exemptions aren’t one-size-fits-all. There are several different reasons for an exemption, each covering a different situation. Some exemptions are good for the entire year, while the duration of other exemptions is determined by the situation that makes you exempt.
You can learn more about the different types of health insurance exemptions and whether or not you might be eligible for an exemption from health insurance in “Can You Get a Health Insurance Exemption?” A hardship exemption is the type of exemption that most people will be interested in. Learn more about it in “How To Get a Hardship Exemption from Health Insurance.”
Applying for an Exemption
Since health insurance exemptions aren’t one-size-fits-all, how you apply for an exemption isn’t one-size-fits-all, either. How you apply for an exemption depends on the reason you’re exempt.
Some health insurance exemptions are granted automatically; you don’t have to do anything. Some types are claimed after-the-fact when you file your federal income tax return. Other health insurance exemptions require that you apply for the exemption with your state’s health insurance exchange. The exchange will evaluate your application and either grant or decline your request.
Exemptions Claimed When You File Federal Income Taxes
If you’re exempt from health insurance for any of the following reasons, you can claim your exemption when you file your federal income tax return by April 15 of the following year.
- You were uninsured for less than three months.
- You’re not residing in the United States legally.
- You’re in prison.
- You’re a member of a recognized Native American Indian tribe.
- You’re a member of a health care sharing ministry.
- You can’t find health insurance costing less than eight percent of your household income. In this situation, consider applying for the exemption through your health insurance exchange even though you’re not required to do so. This particular exemption makes you eligible to purchase a less expensive catastrophic plan through your health insurance exchange even if you’d otherwise be ineligible because you’re over 30 years old.
Since you’ll need proof of exemption to qualify for the catastrophic plan, you’ll benefit by getting the exemption through your health insurance exchange early in the year rather than waiting until you file your taxes next year.
Exemptions You Apply for Through a Health Insurance Exchange
If you’re exempt from health insurance due to any of the following reasons, you need to apply for a health insurance exemption through your state’s health insurance exchange.
- You have a religious objection to health insurance.
- You want a hardship exemption from health insurance.
- You’re eligible to get health care through an Indian health care provider.
Learn how to contact your state’s health insurance exchange from HealthCare.gov’s Marketplace finder tool. Be prepared to provide the exchange with evidence of your hardship or your eligibility to get health care through an Indian health care provider.
If you're applying based on a religious objection, the criteria are very strict including permanently waiving your Social Security benefits. Review those criteria in the above linked article "Can You Get a Health Insurance Exemption?"
If you're applying for a hardship exemption and your state uses the federal health insurance exchange at HealthCare.gov, you can preview the hardship exemption application here.
Automatic Health Insurance Exemptions
The following exemption is automatic. You don’t have to apply for it or claim it on your income tax return.
- Your income is so low that you’re not required to file federal income taxes. Known as the filing threshold, the amount of money you can make and still not be required to file taxes changes each year. You can look up the most recent filing threshold in IRS publication 501 through the IRS Forms & Publications page.
If your income is below the filing threshold, your exemption is automatic. Even if you choose to file federal income taxes to get a refund of money that was withheld from your paycheck, your exemption will still be automatic.
Who Doesn’t Need an Exemption?
You don’t need an exemption if you have health insurance already. If your health insurance is provided by the government like Medicare, Medicaid, or Tricare you don’t need an exemption.
There are some folks that the federal government treats like they’ve met the requirement to have health insurance even if they don’t have health insurance. These folks don’t need to apply for an exemption from health insurance; they won’t have to pay the shared responsibility payment, either. This applies to you if:
- You’re a resident of Puerto Rico, the US Virgin Islands, American Samoa, Guam, or the Northern Mariana Islands. For this to apply, you must have a closer connection to the U.S. possession where you claim residency than you do to the United States itself or a foreign country.
- You live outside the United States for at least 330 days of the year and you have a tax home outside of the U.S.