Obamacare mandated that everyone get qualified health insurance coverage or pay a tax known as the "shared responsibility payment" or "individual mandate." However, the Trump administration later removed the penalty tax for those without coverage. As of 2019, no one is required to enroll in a health insurance plan.
As a result, the Department of Health and Human Services no longer needs to offer national exemptions—everyone is exempt if they choose to be. The only exemption that still applies on a more exclusive basis is for people older than 30 who want "catastrophic" coverage plans.
For historical purposes, keep reading to learn how exemptions used to apply to Obamacare regulations.
To give you a sense of the role exemptions played in healthcare, some 12.7 million Americans claimed at least one exemption in 2015. These exemptions could be for things like not having enough income to owe income taxes. Those people couldn’t pay the penalty because the penalty was imposed in the form of a tax—no taxes, no penalty. Another income-based exemption allowed families to avoid the penalty if the only plans they had access to would cost more than 8.05% of the household's annual income.
The law also provided an exemption to avoid penalizing people who experienced life changes like switching jobs, moving, or something along those lines that could disrupt your health insurance coverage. As long as those lapses in health insurance didn't last longer than two consecutive months out of the year, then you would qualify for an exemption to the penalty tax.
You wouldn’t pay a penalty if you physically couldn't get insurance because, for example, you were in jail or weren’t in the United States.
Exemptions were also granted to members of Indian Tribes, health care sharing ministries, or religious sects that object to insurance.
There were 13 hardship exemptions for those who can't afford insurance. You could apply for one if you:
- Were homeless
- Were evicted or faced eviction/foreclosure in the past six months
- Received a shut-off notice from a utility company
- Were recently a victim of domestic violence
- Recently experienced the death of a close family member
- Filed for bankruptcy
- Experienced substantial property damage from a fire, flood, or any other type of disaster (either natural or man-made)
- Were in debt due to medical expenses
- Have been paying expenses related to the care of a sick family member
- Were denied Medicaid or Children’s Health Insurance Program for your child, and someone else failed to meet their court-ordered obligation to pay for medical support for the child
- Were eligible for a lower-cost plan through an eligibility appeals decision
- Were determined ineligible for Medicaid because you lived in a state that chose not to expand coverage
- Had your individual plan canceled and couldn't find an affordable replacement plan on the Marketplace
In addition to these 13 hardship exemptions, anyone could fill out an application to make their case about why their situation deserved a hardship exemption.
Catastrophic Plan Exemptions
Catastrophic plan exemptions still apply in 2021. These plans have low premiums and high deductibles. Anyone under the age of 30 can sign up for a catastrophic plan at will, but you'll need an exemption if you're older than that. The exemptions for catastrophic plans are nearly identical to the hardship exemptions that used to apply to the individual mandate penalty.
Trump Ends the Individual Mandate
President Trump's tax plan, the Tax Cuts and Jobs Act (TCJA), effectively gave everyone an exemption beginning in 2019. The TCJA did this by reducing the penalty tax to 0%. Barring further legislation, no one needs to obtain health care coverage to avoid paying a penalty tax.
While the repeal of the penalty didn't take effect until 2019, the Trump administration also expanded exemptions for 2018. The expanded exemptions included scenarios in which people lived in an area that had one or fewer health insurance options on the exchanges, or if none of the plans covered a specialist that you need. You could also claim an exemption if all insurance providers covered abortion, and that was against your beliefs.
How to Get Health Care Even Though You're Exempt
Even though all Americans are now exempt from the penalty tax, many want to find health care insurance coverage, anyway. Otherwise, if a medical emergency arises, you could be left covering the high costs of health care on your own.
The Marketplace established by the Affordable Care Act remains active. Anyone can find a plan through the exchange. Depending on their circumstances, they may also receive tax credits that can help pay the costs of premiums. These credits can be applied to premiums throughout the year or taken in one lump-sum during tax time. If you can't find an affordable plan through the marketplace, some clinics offer health care on a sliding scale. You can find a directory of these clinics on the Health and Human Services website.