However, if you live abroad for a calendar year (or at least 330 days within a 12 month period) or you are a bona fide resident in a U.S. territory (e.g. Puerto Rico), then you are deemed to have MEC.
The following programs can qualify for MEC:
- Employer-sponsored coverage (including active, COBRA coverage and retiree coverage)
- Coverage purchased in the individual market
- Medicare Part A coverage and Medicare Advantage
- Most Medicaid coverage
- Children's Health Insurance Program (CHIP) coverage
- Certain types of veterans health coverage administered by the Veterans Administration
- Coverage provided to Peace Corps volunteers
- Coverage under the Nonappropriated Fund Health Benefit Program
- Refugee Medical Assistance supported by the Administration for Children and Families
- Medicare Advantage plans
- State high risk pools and self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014 (after this date may need application to be recognized as MEC).
The following exemptions apply to the MEC requirement:
- Federaly recognized religious conscience
- Health care sharing ministry
- Federally recognized Indian tribes
- No tax filing requirement
- Short coverage gap: no coverage for less than three consecutive months during the year.
- Hardship: A Health Insurance Marketplace, also known as an Affordable Insurance Exchange, has certified that you have suffered a hardship that makes you unable to obtain coverage (see below for more on this point).
- Unaffordable coverage options: minimum amount you must pay for the premiums is more than eight percent of household income.
- Not lawfully present
[Proposed regulations in August 2013 and January 2014 provide examples of coverage that would NOT be considered MEC. This includes some forms of Medicaid coverage that does not provide comprehensive medical coverage but rather limited services (such as family planning services, tuberculosis-related care, pregnancy-related services, or emergency medical care). Also, medically-needy coverage and coverage under Section 1115 demonstration projects may not be MEC if they don’t provide comprehensive coverage. Finally, Tricare “space-available care” and “line-of-duty care”may not qualify as MEC. Because the January guidance was so late, the notice states that limited service coverage like family planning, tuberculosis-related care, pregnancy-related services, or emergency medical care; medically-needy and section 1115 expansion demonstration Medicaid programs; and space-available and line-of-duty Tricare will be treated as MEC for 2014 only.]
The following may qualify for a “hardship” exemption:
- evicted in the past 6 months or were facing eviction or foreclosure.
- received a shut-off notice from a utility company.
- recently experienced domestic violence.
- recently experienced the death of a close family member.
- experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property.
- bankruptcy in the last 6 months.
- medical expenses you couldn’t pay in the last 24 months.
- unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.
- You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, you do not have the pay the penalty for the child.
- As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace.
- You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.
- NEW: You received a notice saying that your current health insurance plan is cancelled, and you consider the other plans available unaffordable.
- NEW: You experienced another hardship in obtaining health insurance.
To see a more updated list of these exemptions, please see the following link from the IRS:
[In October 2013, HHS also announced that a hardship exemption will apply to anyone who enrolls in the first open enrollment period for Marketplace coverage. This means anyone who enrolls during the open enrollment period, will not be subject to the individual mandate penalty for months before their enrollment.]
The exemption process may vary based on which exemption you file under. The Health Insurance Marketplace will provide certificates of exemption for some of the exemption categories and some exemptions apply when you file your taxes. If you are not required to file a federal income tax return, no further action is required.
If you have questions on these rules, please contact Kinney & Larson.