Who will be exempt from the ACA mandate? The final list

HHS releases rule for the insurance mandate

The Obama administration on Wednesday issued a final rule detailing how individuals could obtain exemptions from penalties for noncompliance with the Affordable Care Act's individual mandate.

The final 139-page regulation resembles the proposed rule that HHS issued in January. The agency previously had said the mandate penalty would apply "only to the limited group of taxpayers who choose to spend a substantial period of time without coverage despite having ready access to affordable coverage."

HHS added that the penalty would be imposed on less than 2% of U.S. residents, according to Congressional Budget Office estimates.

Who's exempt?

According to HHS, prisoners, undocumented immigrants, and Indian tribal members will be exempt from the penalties. Members of certain religious sects or health care sharing ministries also can apply for a religious exemption.

Other U.S. residents who will be exempt include:

  • Certain low-income individuals: Those who cannot afford coverage, or live in states that have opted out of the Medicaid expansion;
  • People who have no plan options in their state's health insurance exchange.
  • Other individuals who meet certain criteria: Specifically, individuals who have suffered a hardship or a coverage gap of three or fewer months.
  • : Specifically, individuals who have suffered a hardship or a coverage gap of three or fewer months.

The final rule further clarifies the exemption for Indian tribal members to those of Native American descent who are eligible for services through an Indian health care provider. In addition, it lays out a process through which HHS can create a list of health care sharing ministries that are exempt from penalties. The rule also notes that individuals receiving coverage through state high-risk pools and self-funded health plans could avoid a penalty under a one-year transitional period for plans that start before the end of 2014.

The final rule also includes a hardship exemption for dependents of a worker who has been offered affordable individual coverage but cannot afford the cost of family coverage. Observers have noted that the affordability of family coverage is a technical problem in the ACA, because the law defines "affordable" individual coverage—plans that costs less than 9.5% of a household's income—but does not delineate affordable family coverage.

Further, the rule states that hardship exemptions will be available on a case-by-case basis for individuals who face other circumstances that prevent them from purchasing a qualified health plan. It also notes that hardship exemptions based on the projected affordability of coverage will be valid for an entire coverage year.

Individuals who fail to obtain coverage and do not meet any of the requirements for exemption will pay penalties on their 2015 tax returns (Adams, CQ HealthBeat, 6/26 [subscription required]; Modern Healthcare, 6/26 [subscription required]).

Want to know more about the ACA's coverage expansion?

In 2014, the ACA's Medicaid expansion and health insurance exchanges will go live, expanding insurance to millions of Americans.  

The insurance exchanges: Register for our July webconferences to learn everything you need to know about the insurance marketplaces before they begin enrolling patients on Oct. 1. For an immediate look, check out our new white paper.

The Medicaid expansion: Listen to this on-demand webconference to learn how to manage your hospital's new Medicaid population. For a quick glance, check out the Daily Briefing's primer.

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