QUESTION

I can’t afford to continue my health insurance premiums because of natural disaster-related expenses. Do I qualify for an exemption or will I have to pay a penalty for being uninsured in 2018?

Individuals with no coverage | Individual Responsibility Requirement (Individual Mandate)
ANSWER

The marketplace offers a hardship exemption for floods or disasters causing substantial damage to your property and keeping you from getting health insurance. This exemption can apply to your entire tax household, and to disasters you experienced in the last three years. For the 2018 plan year, the federal government will allow individuals to claim a hardship exemption by directly filing with the IRS without submitting any documentation or providing written explanation (however, consumers are asked to keep documentation showing qualification(s) for the hardship exemption with their tax records). (CMS, Guidance on Claiming a Hardship Exemption through the Internal Revenue Service (IRS), September 12, 2018).

If you are applying for a hardship exemption for plan year 2016 or 2017, or if you would like to submit an application and documentation for 2018, you must fill out the hardship exemption application, available here, and provide a copy of a “police record, insurance claim or other document including a news source” about the event, and mail the application and documents to the following address:

Health Insurance Marketplace – Exemption Processing

465 Industrial Blvd.

London, KY 40741

If you receive a hardship exemption, you may be eligible to purchase catastrophic coverage, which may be less expensive than a marketplace plan. You may want to consider this coverage to protect yourself financially if you have an unexpected illness or injury. This type of coverage will provide for coverage of emergency or catastrophic health events, but note that catastrophic health plans have much higher out-of-pocket costs like deductibles when you want to use your coverage. You also cannot use any federal premium tax credits to purchase a catastrophic plan. It is important to note that to qualify for catastrophic coverage in 2019, you’ll need to apply for a hardship exemption, rather than just claiming it on your tax return. You can find the hardship exemption application here.
(26 U.S.C. § 5000A (e)(5); 45 C.F.R. § 155.605; HealthCare.gov, Hardship exemptions, forms & how to apply).

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