How to Avoid ACA Penalties if You Can’t Afford Health Insurance

The Affordable Care Act (ACA) requires most people to have health insurance. If you don’t have health insurance, you may have to pay a penalty when you file your taxes. The penalty for not having health insurance in 2023 was $2,300 per adult and $695 per child under 18, up to a maximum of $7,500 per family.

However, there are a number of exemptions to the ACA penalty. One of the most common exemptions is the affordability exemption. You may qualify for the affordability exemption if you can’t afford to buy health insurance.

To qualify for the affordability exemption, you must meet the following criteria:

Your household income is below a certain level. For 2023, the income limit for the affordability exemption is $27,540 for an individual and $55,080 for a family of four.
You have applied for and been denied Medicaid or CHIP.
You have tried to buy health insurance but couldn’t find a plan that you could afford.

If you meet the criteria for the affordability exemption, you can claim the exemption when you file your taxes. To claim the exemption, you will need to file Form 8965, Health Coverage Exemptions.

Applying the Affordability Exemption to the Case

In the case of the post, the couple had a household income of $27,000 in 2016. This means that they would have qualified for the affordability exemption. The wife did not have health insurance, but the husband did. This means that they would have been able to claim the affordability exemption for the wife.

To claim the affordability exemption, the couple would have needed to file Form 8965 when they filed their taxes. They would have needed to provide documentation that they had applied for and been denied Medicaid or CHIP. They would also have needed to provide documentation that they had tried to buy health insurance but couldn’t find a plan that they could afford.

If the couple had claimed the affordability exemption, they would have avoided the $700 penalty that they were charged.

Avoiding the Penalty in the Future

The couple in the post also asked how they could avoid the penalty for 2017. The affordability exemption is still available for 2017. To qualify for the exemption, the couple must meet the same criteria as they did in 2016.

If the couple meets the criteria for the affordability exemption, they can claim the exemption when they file their taxes. To claim the exemption, they will need to file Form 8965, Health Coverage Exemptions.

If the couple does not qualify for the affordability exemption, they may still be able to avoid the penalty if they have a qualifying life event. Qualifying life events include losing your job, getting married, or having a child. If you have a qualifying life event, you can enroll in health insurance outside of the open enrollment period.

If you cannot afford to buy health insurance, there are a number of resources available to help you. You can contact your state Medicaid office to see if you qualify for Medicaid. You can also contact your local health insurance Marketplace to see if you qualify for a subsidy.

If you have any questions about the ACA penalty or the affordability exemption, you should contact a licensed insurance agent or tax professional.