When
you go to file your 2014 taxes, you’ll soon discover a new reporting
requirement. You now have to tell the IRS whether or not you had health
insurance in 2014. And if you didn’t have health insurance, you’re going
to owe a tax penalty.
Depending
on your income, this tax penalty could be well over $1,000. Can
you get it out of paying it? Well, yes… under certain circumstances you can.
Fortunately, there are enough loopholes written into the law that most people will be
able to avoid the Obamacare tax.
Almost
none of the uninsured will end up paying the ObamaCare mandate penalty,
according to an updated analysis by the Congressional Budget Office, which
found that 87% will be able to claim an exemption.
That
exemption rate is higher than the CBO had previously thought, which not only
blows a hole in its budget forecast for the law, but also increases the odds of
an insurance industry “death spiral.”
According
to the CBO’s latest estimate, out of the 30 million people who will still be
uninsured in 2016, just 4 million will end up paying any tax penalty, despite
the law’s requirement that everyone buy government-approved insurance.
Obviously, it’s
a good thing for you if you can avoid the tax penalty. You save money. But the
more people who avoid the tax, the better. If nobody pays the penalty (or only
a few people), then that could be the death knell for Obamacare.
So
how do you get an exemption from paying the tax penalty? There are 19 different ways, plus a special “Hardship
Exemption” category that provides an additional 14 exemptions.
For example,
Christians can get an exemption if they participate in a medical bill-sharing
ministry like Medi-Share. Even though medical bill-sharing is not technically
health insurance, it provides similar benefits. So members of these services
will not have to pay the tax penalty.
Here are a few
of the other potential exemptions that could apply to a large number of people:
- You recently experienced the death of a close family member.
- You filed for bankruptcy in the last 6 months.
- You had medical expenses you couldn’t pay in the last 24 months that resulted in substantial debt.
- Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable.
- You experienced another hardship in obtaining health insurance.
Pay
attention to that last exemption.
It’s a general hardship exemption that could apply in many different
circumstances. For example, you might qualify for the exemption if you applied
for health insurance and were denied. Or you might qualify if you were
accepted, but could not afford the premiums. And so on.
Since this is
the first year that people are having to pay the Obamacare tax penalty, many
tax preparers and CPAs will not be up to speed on all these exemptions. That’s
why you must take matters into your own hands. Do the research yourself and do
whatever you can to avoid the tax penalty. Hopefully this article will help you
do that.
If you want to
apply for a hardship exemption, you will need to make sure you check the
correct box on your tax return and then submit this form. And if you’re interested, you can see a complete list of
hardship exemptions here.
Hardship Exemption
|
Documentation Required
|
1. You were homeless.
|
None.
|
2. You were evicted
in the past 6 months or were facing eviction or foreclosure.
|
Copy of eviction or foreclosure notice.
|
3. You received a
shut-off notice from a utility company.
|
Copy of shut-off notice from utility
company.
|
4. You recently
experienced domestic violence.
|
None.
|
5. You recently
experienced the death of a close family member.
|
Copy of death certificate, copy of death
notice from newspaper, or copy of other official notice of death.
|
6. You experienced a
fire, flood, or other natural or human-caused disaster that caused
substantial damage to your property.
|
Copy of police or fire report, insurance
claim, or other document from government agency, private entity, or news
source documenting event.
|
7. You filed for
bankruptcy in the last 6 months.
|
Copy of bankruptcy filing.
|
8. You had medical
expenses you couldn’t pay in the last 24 months that resulted in substantial
debt.
|
Copies of medical bills.
|
9. You experienced
unexpected increases in necessary expenses due to caring for an ill,
disabled, or aging family member.
|
Copies of receipts related to care.
|
10. You expect to claim
a child as a tax dependent who’s been denied coverage in Medicaid and CHIP,
and another person is required by court order to give medical support to the
child. In this case, you don’t have the pay the penalty for the child.
|
Copy of medical support order AND copies of
eligibility notices for Medicaid and CHIP showing that the child has been
denied coverage.
|
11. As a result of an
eligibility appeals decision, you’re eligible for enrollment in a qualified
health plan (QHP) through the Marketplace, lower costs on your monthly
premiums, or cost-sharing reductions for a time period when you weren’t
enrolled in a QHP through the Marketplace.
|
Copy of notice of appeals decision.
|
12. You were
determined ineligible for Medicaid because your state didn’t expand
eligibility for Medicaid under the Affordable Care Act.
|
Copy of notice of denial of eligibility for
Medicaid.
|
13. Your individual
insurance plan was cancelled and you believe other Marketplace plans are
unaffordable.
|
Copy of cancellation notice.
|
14. You experienced
another hardship in obtaining health insurance.
|
Please submit documentation if possible.
|
Due to the number of exemptions available, it’s currently estimated that 87% of uninsured people will not have to pay the Obamacare tax.
Almost
none of the uninsured will end up paying the ObamaCare mandate penalty,
according to an updated analysis by the Congressional Budget Office, which
found that 87% will be able to claim an exemption.
That
exemption rate is higher than the CBO had previously thought, which not only
blows a hole in its budget forecast for the law, but also increases the odds of
an insurance industry “death spiral.”
According
to the CBO’s latest estimate, out of the 30 million people who will still be
uninsured in 2016, just 4 million will end up paying any tax penalty, despite
the law’s requirement that everyone buy government-approved insurance.
Source:http://liberty247.net/health-insurance-2014-19-ways-avoid-obamacare-tax-penalty/
http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions
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