Smart Benefits: New IRS Publication Tells Individuals if They’ll Pay an ACA Penalty at Tax Time

Smart Benefits: New IRS Publication Tells Individuals if They’ll Pay an ACA Penalty at Tax Time

The Internal Revenue Service recently issued a Publication 5172 to help individuals understand if they qualify for an exemption to the individual health coverage requirements under the Affordable Care Act (ACA). That means they won’t have to obtain coverage – and won’t have to make a shared responsibility payment when they file their tax returns.

Who Qualifies

The ACA requires every individual to have minimum essential coverage – unless they qualify for an exemption. And an estimated 90 percent of uninsured will be able to claim an exemption. But how do individuals know?

The new publication lists exempt individuals, which include:

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• Members of certain religious sects
• Certain noncitizens
• Coverage is considered unaffordable
• Household income is below the income tax return filing threshold
• Members of federally-recognized Indian tribes
• People who are incarcerated
• Those who have income below the federal poverty level

 

How to Claim an Exemption

Certain exemptions can only be claimed from the Marketplace in the area where individuals live, others only from the IRS, and some from either the Marketplace or the IRS. All exemptions are reported on the tax return; however, individuals are automatically exempt if they don’t have to file a return because their income is below the filing threshold

More Information

For more information on the individuals shared responsibility payment, the IRS has also released Publication 5156 and an exemption chart.

Amy Gallagher has over 21 years of healthcare industry experience guiding employers and employees. As Vice President at Cornerstone Group, she advises large employers on all aspects of healthcare reform, benefit solutions, cost-containment strategies and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, and is often quoted by national publications on the subject matter. Locally, Amy is a member of SHRM-RI, the Rhode Island Business Group on Health, and the Rhode Island Business Healthcare Advisory Council.