What was the hardship exemption?
People who couldn’t afford health insurance due to personal or financial difficulty received a hardship exemption. The Patient Protection and Affordable Care Act (ACA) of 2010 had exclusions. Individuals had to have adequate health insurance or pay a charge. Exemptions were available to anyone who couldn’t afford coverage without penalty. The Tax Cuts and Jobs Act (TCJA) of 2019 removed the charge for uninsured persons.
What Hardship Exemptions Did
Obama signed the Affordable Care Act on March 23, 2010. Obamacare lowered health care prices by creating exchanges, expanding Medicaid, eliminating insurance denials, and penalizing uninsured individuals.
Basic health care coverage became mandatory for most people in 2014. The uninsured paid an individual or shared responsibility fee. The IRS charged individuals once for filing their annual tax returns. Health Insurance Marketplace hardship exemptions were provided to low-income consumers.
A hardship exemption is available for tax years 2015–2018 under certain conditions:
- Homelessness
- You risked eviction or foreclosure within six months.
- Utility companies sent shut-off notices.
- You suffered domestic abuse.
- You lost a close relative in the past three years.
- A fire, flood, or natural or artificial calamity damaged your property.
- Your bankruptcy filing occurred within six months.
- You couldn’t pay medical bills in the past 24 months.
- Living with a sick, handicapped, or elderly relative increases your bills unexpectedly.
- Your tax return included a kid who refused Medicaid and CHIP coverage and a court-ordered medical provider. You did not owe the penalty for the child.
- Due to an eligibility appeals ruling, you may be eligible for a marketplace-based QHP, lower monthly premiums, or cost-sharing reductions for some time if you are not enrolled in the QHP.
The Trump administration abolished the individual mandate in 2019, ending penalties for uninsured people. The government extended hardship exemption requirements, making it more straightforward to escape the penalty until 2018 if:
- Lived without market plans.
- lived where one business sold plans on the market
- Finding an inexpensive plan without abortion coverage was challenging.
- Personal circumstances prevented them from buying a marketplace plan, including not finding a specialist care plan.
Due to the individual mandate’s repeal in 2019, uninsured people are no longer punished.
President Biden’s health care proposal reinstates the individual mandate.
Special Considerations
Monthly hardship exemptions usually cover the months before, during, and after the difficulty. Sometimes, the exemption lasts for a year. Seven people are ineligible for Medicaid because their state has not extended coverage. Documentation was typically requested for exemption applications.
Conclusion
- In certain cases, those who couldn’t afford health insurance received hardship exemptions.
- Exempted individuals didn’t pay the individual mandate or shared responsibility payment for not having health insurance amid hardship.
- Hardship exemptions included homelessness, eviction, domestic violence, and bankruptcy.
- As the individual mandate expired in 2019, hardship exemptions ended.
