Hardship exemptions were setup to provide people relief from the requirement to have health insurance or pay a penalty.
♦ Through the 2018 plan year, most people were still required to have health insurance or pay a penalty for the months they did not have insurance.
♦ Starting with the 2019 plan year, the penalty no longer applies. If you don’t have insurance during 2019 or later, you don’t need an exemption to avoid a penalty.
► However, if you wish to purchase a catastrophic health insurance plan, and you are over the age of 30, you still have to request a hardship exemption.
♦ Here is a link to hardship and affordability exemption forms.
You can claim the hardship exemption for 2018 without submitting any documentation about the hardship when you file your 2018 federal tax return.
♦ In April of 2018, the Trump administration expanded the types of situations that may qualify for a hardship exemption.
The list now includes:
- Live in area with no Qualified Health Plan (QHP)
- Live in area where only one insurer offers a QHP and can show lack of choice
- All affordable plans cover abortion and the absence of any affordable plan without such coverage causes a hardship
- All plans do not meet needs for specialty care by a specialist physician
Hardships are life situations that keep you from getting health insurance. If you qualify for a hardship exemption, you don’t have to have health insurance or pay a penalty for the months the exemption applies.
Getting a hardship exemption
To claim a hardship health coverage exemption, you must fill out a paper application and mail it to the Health Insurance Marketplace.
♦ Not to be confused with Coverage Exemptions, which relate to gaps in insurance coverage due to circumstances other than hardship.
How long do hardship exemptions last?
Hardship exemptions usually cover the month before the hardship, the months of the hardship, and the month after the hardship.
But in some cases the Marketplace may provide the exemption for additional months, including up to a full calendar year.
- For people ineligible for Medicaid only because a state hasn’t expanded Medicaid coverage, the hardship exemption will be granted for the whole calendar year.
- For people eligible for Indian Health Services, the hardship exemption lasts as long as you remain eligible.
- For people under 21 who are eligible for an exemption due to religious conscience, you’ll need to reapply if you remain a member when you turn 21.
Circumstances that may qualify for a Hardship Exemption
- You were homeless
- You were evicted in the past or were facing eviction or foreclosure
- You received a shut-off notice from a utility company
- You recently experienced domestic violence
- You recently experienced the death of a close family member
- You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property
- You filed for bankruptcy
- You had medical expenses you couldn’t pay
- You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member
- Another individual is legally required to provide medical support for a child the consumer claims as a dependent on his/her tax return, and the child was denied Medicaid/CHIP, this exempts the tax filer from the shared responsibility payment for the child
- Appeals decision found the individual eligible for enrollment in a QHP for time period when he or she wasn’t enrolled in a QHP
- Doesn’t qualify for Medicaid solely based on a state’s decision not to expand Medicaid eligibility
- Individual insurance plan was cancelled and consumer believes available plans are unaffordable
- Experienced another hardship, may be used for specific scenarios described in CMS guidance (ex: new guidance for AmeriCorps, Vista, and NCCC members)
If you ask for hardship exemption based on affordability, you can ask through the Marketplace or you can claim an exemption from the penalty when you file taxes. If you apply through the Marketplace, you have to do so during open enrollment or a special enrollment period.
♦ Affordability will be based on the cost of coverage relative to your estimated household income for the coming year. To get an exemption for the entire calendar year, you must apply before the year starts.
Health insurance would be considered affordable to you if your employer offers a plan that costs less than 9.78% of your household income in 2020. This is down from 9.86% in 2019.
→ The percentage rises in 2021 to 9.83%.
If your employer does not offer health insurance than affordability is judged based upon the cost of a Marketplace plan.
Marketplace Plan Not Affordable
In 2020, coverage is considered unaffordable if the lowest cost Bronze-level plan available to you through the Marketplace is more than 8.24% of your household income.
The total cost to you must be more than 8.24%, accounting for any premium tax credit you would qualify for if you enrolled in that plan.
Try not to confuse
The Premium Tax Credit also takes into consideration if a plan offered to you is affordable or not. That determination is not calculated the same way as the exemption discussed above. Please read the detailed article titled: Affordable Coverage
Visit HealthCare.gov for a complete list of possible exemptions and application forms.