9 Exemptions/Loopholes to the Individual Mandate under the ACA

Summary: The individual mandate under the ACA is to become effective January 1, 2014. Are there any exceptions to the mandate?

As of January 1, 2014, all Americans are required to have health insurance coverage under the Patient Protection and Affordable Care Act (PPACA). As with most rules, there are exceptions. The provisions of the PPACA have many, especially the controversial individual mandate. The controversy surrounding the individual mandate was whether the provision was a “mandate” or a “tax.” In the end, it is a mandate, with penalties for non-compliance issued in the form of taxes.

There are nine exemptions to the individual mandate under the ACA, according to the Internal Revenue Service. These groups will not be assessed penalties in the form of taxes should they choose not to carry health insurance coverage.

1. Religious beliefs. The Social Security Administration recognizes certain religious groups that are strongly opposed to health insurance coverage. If you are a member of one of these officially recognized groups, you are exempt from the individual mandate.
2. Health care sharing ministry. If you are a member of a health care sharing ministry, you are exempt from the individual mandate.
3. Indian tribes. If you are a member of a federally recognized Indian tribe, you are exempt from the individual mandate.
4. No filing requirement. If your income is below the level at which you must file a tax return, you are exempt from the individual mandate. The threshold is determined based on your filing status, your age, and the types and amounts of income you earn.
5. Short coverage gap. If you went without insurance coverage for less than three consecutive months during the year, you are exempt from the individual mandate.
6. Hardship. If the Health Insurance Marketplace has categorized you as experiencing a hardship that makes health insurance unobtainable, you are exempt from the individual mandate.
7. Unaffordable coverage options. If the minimum amount you are required to pay is more than 8% of your household income, insurance coverage is deemed unaffordable and you are exempt from the individual mandate.
8. Incarceration. If you are in a jail, prison, or similar penal institution or correctional facility due to charges filed against you, you are exempt from the individual mandate.
9. Not lawfully present. If you are not a U.S. citizen, a U.S. national, or an alien lawfully present in the U.S., you are exempt from the individual mandate.

The purpose of the PPACA is to provide affordable insurance to more Americans, with the focus of reducing the rate of uninsured individuals. As such, the individual mandate will go into effect in January 2014. Those who do not fall into one of the categories above will be required to carry insurance or face substantial penalties. The penalties set forth for 2014 are the greater of $95 for individuals or 1% of income. Higher penalties will be assessed to families. There are also plans to increase these thresholds for at least 2015 and 2016, and we could see dramatic increases in penalties beyond 2016. While insurance is a wonderful invention that provides peace of mind and money savings, should it be a requirement, or should it be left to individual choice?

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