ACA penalty question- affordability

[kathyc2]

During 2016 sign-up period, young person was unemployed and no idea of what 2016 income would be. Filled out app on healthcare.gov, but did not follow through on jumping through hoops to prove no current income.

Ended up with 2016 income of just over 15K which would qualify for Medicaid. Employer does not have group insurance.

Full cost of bronze would be over 8.13% of income. Would this count as exemption for affordability? I'm not finding good info as to how it works in conjunction with Medicaid eligibility.

[TaxGuyBill]

Yes, it would qualify.

The "Marketplace Coverage Affordability Worksheet" for the 'unaffordable' exemption takes the cost of the Bronze plan and subtracts the Premium Tax Credit that you could have received. If a person is eligible for other insurance (including Medicaid), a person does not qualify for the Premium Tax Credit. Therefore, the calculation is the Bronze plan minus zero (no Premium Tax Credit).

Because the Bronze plan (minus zero) is over 8.13%, the taxpayer qualifies for the "unaffordable" exemption.

https://www.irs.gov/pub/irs-pdf/i8965.pdf#page=11

[kathyc2]

Thanks. My opinion was there should be the exemption, but it's good to have concurrence.