MinistryCPA Special Topic: Exemption Overview for the Health Insurance Marketplace

The "shared responsibility payment" started in 2014, which means that every person needs to have health insurance or make a payment (a nice way of saying a fee) on his or her federal income tax return. However, HealthCare.gov lists some exemptions that may allow individuals to avoid making this payment. Below, we have broken down the various exemptions while describing the different ways to apply for them.

Several of the exemptions can be claimed in one of two ways: (1) either when you file your federal tax return for the year or (2) when you apply for the exemption early through an application form. The following exemptions can be claimed by either of the two options previously described:

1. Exemptions based on coverage being unaffordable
2. Exemptions for membership in a health care sharing ministry
3. Exemptions for membership in a federally-recognized tribe
4. Exemptions for being incarcerated

The following three exemptions can only be claimed in advance through an application form and not when you file your federal tax return:

1. Exemptions based upon hardship
2. Exemptions based on eligibility for services through an Indian health care provider
3. Exemptions for membership in a recognized religious sect whose members object to insurance

The last three exemptions have special situations:

1. Exemptions based on low income: If your income is low enough and you do not need to file a tax return, you do not need to apply for an exemption.  
2. Exemptions based on coverage gap: If you have a gap in coverage of less than 3 months, you do not need to apply for an exemption.
3. Exemptions based upon illegal presence in the U.S.: If you are not lawfully present in the U.S., you do not need to apply for an exemption.

If you do not qualify for these exemptions and if you do not have a qualified health insurance plan, here are the fees you will have to pay on your federal tax return.