IRS Publication 5172, Facts about Health Coverage Exemptions

This provides information for taxpayers who qualify for and may claim exemption from minimum essential coverage so that they do not need to make individual shared responsibility payments when they file their federal tax returns.

The Congressional Budget Office and Congress’s Joint Committee on Taxation estimated in a report they released last week that nearly 90 percent of the uninsured will be able to qualify for an exemption from the individual mandate for getting health insurance coverage.

Those who are exempt include unauthorized immigrants, who are prohibited from receiving almost all Medicaid benefits and all subsidies through the insurance exchanges; people with income low enough that they are not required to file an income tax return; people who have income below 138 percent of the federal poverty guidelines (commonly referred to as the federal poverty level) and are ineligible for Medicaid because the state in which they reside has not expanded eligibility by 2016 under the option provided in the ACA; people whose premium exceeds a specified share of their income (8 percent in 2014 and indexed over time); and people who are incarcerated or are members of Indian tribes, according to the report.

Approximately 23 million uninsured people in 2016 will qualify for one or more of those exemptions, according to the CBO and JCT report. Of the remaining 7 million uninsured people, they estimate that some will be granted exemptions from the penalty because of hardship or for other reasons.

“Among the uninsured people subject to the penalty, many are expected to voluntarily report on their tax returns that they are uninsured and to pay the amount owed,” said the report. “However, other people will try to avoid payments. CBO and JCT’s estimates of the number of people who will pay penalties account for likely compliance rates as well as the ability of the Internal Revenue Service (IRS) to administer and collect the penalty payments.”

In addition to the publication on exemptions, the IRS has also released Publication 5156, “Facts about the Individual Shared Responsibility Payment,” an exemption chart, an IRS YouTube videoentitled "Individual Shared Responsibilities - Overview," and a Web page with Questions and Answers on the Individual Shared Responsibility Provision to provide more information.

The IRS noted that its Web page, IRS.gov/aca, has the latest information about ACA tax provisions. Visit HealthCare.gov for information about health insurance coverage and financial assistance.

Source: Internal Revenue Service at http://www.irs.gov/uac/Individual-Shared-Responsibility-Provision