Affordable Care Act: Huge tax relief via Individual Shared Responsibility

In 2014, the Federal government, State government, insurance providers, employers, and individuals have started to shoulder the burden of health insurance coverage under the Affordable Care Act, or Obamacare. A lot of people have already got themselves insured under suitable health insurance policies known as the minimum essential coverage and hence, don’t necessarily require to add up any more coverage in them.

Here, as per the Federal government’s ‘individual shared responsibility’ provision, you and your family members are obligated to honor the below mentioned directives:

1. You and your family members might have minimum essential coverage or,
2. Must be exempted from the responsibilities of having themselves covered under the minimum essential coverage clause, or
3. Else, you may have to make an additional payment at the time of filing your tax returns in 2015, as part of the shared responsibility provision.

What are the terms included in Minimum Essential Coverage?

In case, you and your family members are required to buy minimum essential coverage, then you might have a host of alternatives at your disposal. The said alternatives are as follows:

• Coverage such as Medicare, Medicaid, health care programs for veterans and various other government-financed social welfare programs for which you qualify.
• You can buy health insurance from your local health insurance market. It’d be an added advantage for you, only if you qualify for any kind of financial help.
• You may choose to go for your employer-sponsored health insurance coverage.
• There are many insurance providers from whom you can directly get insured.
• Apart from the above options, you may choose any health insurance provider of your liking, but it should be recognised by the Department of Health and Health Services under the minimum essential coverage mandate.

Moreover, if you stay overseas for more than a year or are resident of different U.S territories, then you are also required to be covered under the minimum essential coverage.

According to the individual shared responsibility, you’ll have to pay for the entire month’s minimum essential coverage, even if you hold the insurance coverage for just a day in that given month. For instance, if you’ve joined a new job on July 18 and have been inducted into your employer’s group health insurance policy, then as per the law, you’ll be considered as covered for the whole month. Alternatively, if there is an exemption in your coverage even for a day, then you won’t have any coverage for that same whole month.

To get some tax benefits (premium tax credit), you must buy your health insurance from the Marketplace and that it should be compliant with the guidelines, as stipulated in the law. The tax incentives which you’ll get may be used to pay off your policy’s premium.

What are the exemptions you’d enjoy?

There are certain criteria that if you meet them, then you could be exempted from paying for the minimum essential coverage and so, will not be bothered to make payments under the shared responsibility clause at the time of your tax return filing in 2015. Here is the criteria that you’ll have to meet to qualify for the said exemptions:

• You’re exempted if you’ve got no coverage choices to make if the annual payable premium amount is over eight percent of your household income.
• You were not covered under the said coverage for less than three consecutive months, or
• If you may qualify for the exemptions due to reasons like:
1. severe financial hardship that stops you from affording a suitable coverage,
2. belong to a group that is exempted from fulfilling the requirement.

Due to the Affordable Care Act, health insurance coverage has become accessible to a lot of Americans. Still, you may qualify for an exemption, even if you and your family doesn't have a coverage that is below eight percent of your household income.

Here, an exemption had been granted to people who bought their insurance policies via the Marketplace at the time of initial enrollment period in 2014 of which the deadline ended on 31st March 2014. The government made this hardship exemption applicable from January 1st, 2014 and has planned to keep the same valid until its health care coverage has been doled out to the people like you. However, to be eligible for that you must have enrolled yourself between March 16 through March 31, 2014. As a result, you’d have got the coverage by May 1, 2014.

In addition, you might have also qualified for another hardship exemption. In this case, you must have been notified by your health care coverage provider that they’ll not renew your insurance policy and that other insurance policies are unaffordable for you at that moment.

The bottom line is that the type of exemption you’re eligible for will determine the manner by which you’ll get it. Therefore, you might get your exemption either only from the Marketplace or only from the IRS (Internal Revenue Service). However, others might get their exemptions either from the IRS or from the Marketplace.