Facts about The Affordable Care Act (Obama-care)

The Affordable Care Act includes the individual shared responsibility provision and the premium tax credit that may affect your tax return. 

Individual shared responsibility provision Basic Information

The individual shared responsibility provision requires you and each member of your family to do one of the following:

  • Have qualifying health coverage called minimum essential coverage;
  • Qualify for a health coverage exemption,
  • Make a shared responsibility payment when you file your federal income tax return.

Many people already have minimum essential coverage and do not need to do anything more than maintain that coverage and report their coverage when they file their tax returns.

Minimum Essential Coverage

You are considered to have minimum essential coverage for the entire month as long as you are enrolled in and entitled to receive benefits under a plan or program that is minimum essential coverage for at least one day during that month.

Minimum essential coverage includes:

  • Most health insurance coverage provided by your employer
  • Health insurance purchased through the Health Insurance Marketplace in the area where you live, where you may qualify for financial assistance
  • Coverage provided under a government-sponsored program for which you are eligible – including Medicare, Medicaid, and health care programs for veterans
  • Health insurance purchased directly from an insurance company
  • Other health insurance coverage that is recognized by the Department of Health & Human Services as minimum essential coverage.

U.S. citizens who are residents of a foreign country for an entire year, and residents of U.S. territories, are considered to have minimum essential coverage for the year.

Exemptions

If you meet certain criteria for a tax year, you may be exempt from the requirement to have qualifying health coverage. If you are exempt, you will not have to make a shared responsibility payment when you file your federal income tax return. For any month that you do not qualify for a coverage exemption, you will need to have minimum essential coverage or make a shared responsibility payment.

You may be exempt if you meet one of the following:

  • The minimum amount you must pay for the annual premiums is more than eight percent of your household income
  • You have a gap in coverage that is less than three consecutive months
  • You qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement.

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