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Date last modified: 01/26/17

The Affordable Care Act, passed in 2010 by Congress, requires all taxpayers and their dependents to have health insurance coverage or qualify for an exemption from coverage.  Health insurance may be provided by employers, Federal and State Health Marketplace exchanges, State Medicaid programs, military programs, tribal health programs, etc.  Taxpayers without health insurance coverage and who don't qualify for an exemption may be subject to a penalty.  The penalty is calculated on the annual tax filing.  All members of a household who have no health insurance are at risk for a penalty.

Health insurance coverage must cover the following health benefits that are considered essential:

  • Outpatient Care

  • Emergency Room Care

  • Inpatient Care in Hospital

  • Pre- and Post-Natal Care

  • Mental Health and Substance Use Services

  • Prescription Drugs

  • Therapy Services including Physical, Occupational, Speech, etc.

  • Laboratory Tests

  • Preventive Services and Screenings

  • Pediatric Care, including Dental and Vision for Kids

Taxpayers may qualify for an exemption from the penalty for not being insured if one of the following conditions is met:

  • Uninsured for less than 3 months of the year

  • The lowest-priced health insurance coverage would cost more than 8% of your household income

  • Income is below the tax filing requirement

  • Member of a federally-recognized tribe or eligible for service through an Indian Health Services provider

  • Member of a recognized Health Care Sharing Ministry

  • Member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare

  • Incarceration

  • Not lawfully present in the United States

  • Taxpayer qualifies for a hardship exemption

To secure an exemption, you may need to apply for one in advance of filing your tax return.  The applications and instructions can be found on the healthcare.gov website.  Note that you must use the application relevant to the type of exemption you are seeking.  Once the application is accepted, you will receive a code that must be put on the tax return.  If your application is denied, you may be able to appeal the decision.