For the 2018 tax year, most taxpayers must have minimum essential health coverage or pay the Shared Responsibility Payment (sometimes called the 'penalty' or 'mandate') for the months in which they did not have health insurance. If a taxpayer qualifies for a health coverage exemption, he or she does not have to pay the penalty.
Beginning with the 2019 tax year (for which tax returns are filed in early 2020), the penalty no longer applies. A taxpayer who does not have health coverage in 2019 or later, does not need an exemption to avoid the penalty.
Under the Affordable Care Act, there are four types of exemptions that an individual can claim to avoid the Shared Responsibility Payment.
These exemptions are:
(1) Marketplace – Granted Coverage Exemptions which can only be issued by a state exchange or the Federal Marketplace. See: Marketplace Granted Coverage Exemptions;
(2) Coverage Exemptions which the taxpayer elects if they meet certain qualifying conditions, which is covered in Coverage Exemptions;
(3) Household Income Below Filing Threshold. See: Filing Threshold Exemptions; and
(4) Gross Income Below Filing Threshold which is also covered in Filing Threshold Exemptions
All exemptions are reported on the tax return, although the taxpayer is automatically exempt if he/she does not have to file a return because their income is below their filing threshold.