Health insurance is often seen as a necessity in today’s world. However, there are instances where individuals may be exempt or not required to have health insurance.

In this article, we will discuss health insurance exemption rules and what they mean for you.

What is a Health Insurance Exemption?

Exemptions are allowed under the law that enforces the individual mandate, which requires most Americans to have health insurance. If an individual is exempt from the mandate, they will not be penalized for not having insurance.

Who Qualifies for an Exemption?

There are several ways to qualify for an exemption from the individual mandate. These include but are not limited to the following:.

Income below the tax filing threshold
Short coverage gap of less than three months
Hardship or affordability exemption
Religious beliefs that prevent you from accepting insurance benefits
American Indian or Alaska Native

If you believe you may qualify for an exemption, you will need to apply through the Marketplace or file a tax return. Each exemption has specific requirements and may require certain documentation to prove eligibility.

Income Below the Tax Filing Threshold

If an individual’s income is below the tax filing threshold, they may qualify for an exemption.

The threshold for filing taxes varies from year to year, but for the 2021 tax year, individuals with an income of less than $12,400 are not required to file a federal tax return.

Individuals who fall under this category will have to apply for an exemption through the Marketplace or file a tax return indicating that they are exempt from the individual mandate.

Short Coverage Gap of Less Than Three Months

If an individual does not have coverage for a period of less than three months, they may qualify for an exemption. This exemption is called the short coverage gap exemption.

This exemption applies to individuals who have experienced a gap in coverage but then obtained qualifying health coverage within three months of the gap.

For example, if an individual lost their job and their employer-sponsored coverage ended on July 31st, but they got a new job and employer-sponsored coverage starting on October 1st, they would be exempt from the individual mandate penalty for the period between August 1st and September 30th.

Hardship or Affordability Exemption

If an individual faces circumstances that make it difficult to obtain health insurance coverage, they may qualify for a hardship or affordability exemption. These include:.

Experiencing homelessness
Being evicted or facing foreclosure
Experiencing a domestic violence situation
Experiencing the death of a close family member

Additionally, if an individual’s required contribution for employer-sponsored coverage exceeds 8.27% of their household income, they may be eligible for an affordability exemption.

Religious Beliefs that Prevent You from Accepting Insurance Benefits

If an individual is a member of a religious sect that has objections to health insurance, they may qualify for an exemption.

This exemption applies only to individuals who are members of a recognized religious sect and have religious objections to accepting insurance benefits.

American Indian or Alaska Native

American Indians or Alaska Natives may qualify for an exemption from the individual mandate.

They are not required to pay the penalty if they can show that they are a member of a federally recognized tribe or Alaska Native Shareholder and are eligible for services through an Indian health care provider or the Indian Health Service.

Conclusion

Health insurance exemption rules are in place to assist individuals who may have difficulty obtaining health insurance coverage.

If you qualify for an exemption, it is important to take advantage of it as failing to obtain health insurance can result in costly penalties.

If you believe you may qualify for an exemption, be sure to speak to a qualified professional or visit the Marketplace website to find out what steps you need to take to apply for an exemption.