ACA Penalty Exemption?

[Grace]

Taxpayer had insurance under New York's Essential Plan (1of 2 states to adopt "ACA's Basic Health Program" which covers people with incomes a little too high for Medicaid).

NY's Essential Plan covers NY residents up to 200% of FPL.

My client received a 1095-B from NYS Dept. of Health which shows coverage for all but 4 months (July to Oct.) Somehow she was dropped and it took a long time to get reinstated.

Taxpayer's income is 151% of the FPL so she would not have been eligible for Medicaid but would have been eligible for the Essential Plan except for the mix-up.

Can I use the affordability exemption for the months that she was without coverage OR is the fact that she would have been eligible for the NY Essential Plan rule that out?

Thanks.

Grace

[TaxGuyBill]

Being eligible for that plan would not disqualify the Unaffordable exemption.

However, if they were NOT eligible for that program during that time, the taxpayer would almost definitely not qualify for the Unaffordable exemption because the calculation would include the hypothetical Premium Tax Credit, making it affordable. If they were "eligible for minimum essential coverage" (see Line 10 of the Affordability Worksheet), that eliminates the hypothetical Premium Tax Credit, and makes the calculation much more likely to be "Unaffordable".

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

[Grace]

Still fretting over this

Being eligible for that plan would not disqualify the Unaffordable exemption.

However, if they were NOT eligible for that program during that time, the taxpayer would almost definitely not qualify for the Unaffordable exemption because the calculation would include the hypothetical Premium Tax Credit, making it affordable. If they were "eligible for minimum essential coverage" (see Line 10 of the Affordability Worksheet), that eliminates the hypothetical Premium Tax Credit, and makes the calculation much more likely to be "Unaffordable".

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

Thanks, TaxGuyBill

If I read your response correctly and line 10 says in part "who isn't eligible for minimum essential coverage (other than coverage in the individual market)" then I could interpret this as: Taxpayer is eligible for minimum essential coverage (in this case NY Essential Plan) and therefore would not be going to the individual market so no monthly premium for SLCSP needs to be entered on the line 10?

I'm sorry about my being so dense. I'm trying to get out of a $200 + penalty and I don't want it coming back to haunt me.

I hate this ACA stuff. So time consuming...

Grace

BTW, IRS website lists what is considered MEC and the NY Essential Plan would fall under "Coverage under government-sponsored programs" as "Coverage through a Basic Health Program (BHP) standard health plan." NYS's Essential Plan is a BHP.

[TaxGuyBill]

If I read your response correctly and line 10 says in part "who isn't eligible for minimum essential coverage (other than coverage in the individual market)" then I could interpret this as: Taxpayer is eligible for minimum essential coverage (in this case NY Essential Plan) and therefore would not be going to the individual market so no monthly premium for SLCSP needs to be entered on the line 10?

Correct. If the taxpayer was still eligible, the SLCSP would be $0.

That basically means you can skip the worksheets and just determine if the cost for the Lowest Bronze Plan is less than 8.13% of their income (just be sure to use the monthly cost for a Bronze plan and 1/12 of their annual income).