Affordable Care Act (ACA) Exemptions

By now, according to the Affordable Care Act, most people must have qualifying health coverage and Applicable Large Employers (ALEs) must be providing that healthcare coverage. Beginning with the 2016 tax year, both groups must report the health insurance coverage they offered and received to the IRS. If anyone, recipients and providers alike, doesn’t remain compliant with these new regulations (by not having insurance, not offering coverage, or not reporting correctly or at all), they may be subject to fees and penalties from the IRS. However, certain exemptions have been put in place to offer relief to those who apply.

Exemptions for Individuals Without Healthcare Coverage

If you don't currently have health insurance, or didn't during 2016, you may be exempt from paying the penalty normally required of those who don't have coverage. Check to see if any of the exemptions listed below apply to you:

• You got coverage during the open enrollment period, either inside or outside the Marketplace
• You went less than 3 months without coverage
• Your income is below the tax filing threshold
• Coverage would cost more than 8% of household income per person
• You were denied coverage under Medicaid or Children's Health Insurance Program (CHIP)

Exemptions for Employers Regarding Healthcare Coverage and Reporting

If you're an employer who is unable or unwilling to provide healthcare coverage to your employees or timely and accurately file the required IRS forms, you may still be exempt from the penalties you'd otherwise incur. There are four ways you might be exempt from any penalties.

• Qualifying Offer Method

There is a second method available for reporting called the Qualifying Offer Method. If you provided a “qualifying offer” of insurance to any of your full-time employees, you may be eligible for this exemption. A qualifying offer is an offer of a bronze level or higher plan, where the employee’s cost for the coverage is less than $1,100 in 2016 (9.5% of the Federal Poverty Level). You must also make this offer to the employee’s spouse and dependents.

• Qualifying Offer Method Transition Relief

For 2016 only, if you made a qualifying offer to at least 95% of your full-time employees and allowed their family members to enroll in the plan, you may use the Qualifying Offer Method simple reporting for all employees, including those who did not receive a qualifying offer that year.

• Section 4980H Transition Relief

50-99 employees:

No payment is required under section 4980H(a) or (b) for 2016 if you did not reduce the size of your workforce, overall service hours, or health coverage between February 9, 2014-December 31, 2014.

100+ employees:

If you had 100+ full-time employees on business days in 2015 and owe a payment under 4980H(a), calculate your 2016 transition relief by reducing your number of full-time employees by your allocable share of 80 (rather than 30).

• 98% Offer Method

The IRS offers this method to employers who offer a qualifying method to at least 98% of their full-time employees. With this method, you’re not required to identify which employees regularly work full-time hours.