What Was the Hardship Exemption?
Let me explain what the hardship exemption was. It was a provision under the Patient Protection and Affordable Care Act (ACA), signed into law in 2010, that let individuals skip the penalty for not having health insurance if they couldn't afford it due to personal or financial reasons. You had to have minimum essential coverage, or you'd face a fee, but if that was out of reach, you could apply for this exemption and avoid the hit. That all changed in 2019 when the Tax Cuts and Jobs Act wiped out the fee entirely.
Key Takeaways
Here's what you need to know directly. These exemptions went to people in tough spots who couldn't buy health coverage. If you got one, you didn't pay the individual mandate or Shared Responsibility Payment for that time. Things like being homeless, getting evicted, facing domestic violence, or going bankrupt qualified you. But after 2019, none of this matters because the mandate got axed.
How Hardship Exemptions Worked
The ACA, signed by President Obama on March 23, 2010, and often called Obamacare, aimed to make health care cheaper through exchanges, Medicaid expansion, coverage guarantees, and penalties for the uninsured. From 2014, you needed minimum essential coverage or you'd pay the Shared Responsibility Payment via your taxes, collected by the IRS. If you couldn't afford it, apply through the Health Insurance Marketplace for a hardship exemption.
For tax years 2015 to 2018, exemptions covered situations like homelessness, recent eviction or foreclosure, utility shut-off notices, domestic violence, death of a close family member in the last three years, disasters damaging your property, recent bankruptcy, unpaid medical bills over 24 months, extra costs for caring for ill or aging family, issues with child coverage under Medicaid or CHIP where court-ordered support applied, eligibility appeals for Marketplace plans, or ineligibility for Medicaid due to state non-expansion.
Under the Trump administration, they broadened approvals up to 2018 for cases like living in areas with no Marketplace plans, only one insurer available, inability to find plans without abortion coverage, or personal barriers to buying a plan, such as lacking specialty care options. Remember, the mandate ended in 2019, so no more penalties for being uninsured.
Important Note
Keep this in mind: President Biden's health care agenda includes reviving the individual mandate.
Special Considerations
These exemptions usually covered the month before, during, and after the hardship, sometimes extending to a full year, like for those blocked from Medicaid in non-expansion states. You'd often need to submit proof with your application.
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