The final rule on exemptions from the individual shared responsibility payment penalty mandated by the Patient Protection and Affordable Care Act identifies nine categories. Less than 2% of Americans are expected to qualify for exemption, the Congressional Budget Office estimates.
The Department of Health & Human Services released on Wednesday its final rule [PDF] detailing who is eligible for receive exemptions from the individual shared responsibility payment penalty required as part of the Patient Protection and Affordable Care Act's individual mandate.
The penalty is a flash point among some interest groups and members of Congress who object to Americans being subjected to the play or pay provision of PPACA. Several bills are expected to be introduced in Congress to remove the penalty entirely.
In a fact sheet released with the rule, HHS contends that the rule "will ease implementation and help to ensure that the shared responsibility payment obligation applies only to the limited group of taxpayers who have ready access to affordable coverage but choose to spend a substantial period of time uninsured."
Less than 2% of Americans are expected to owe a shared responsibility payment, the Congressional Budget Office estimates.
The 139-page regulation, which was released without fanfare, is largely a reflection of the proposed rule released in February. It confirms that individuals who cannot afford health insurance will not be subject to the penalty payment. It also clarifies an exemption from the penalty for people who live in states that have opted not to expand their Medicaid coverage.
The rule details nine categories of exemptions, including:
- People who lack access to available plans on the state health exchanges
- People who have experienced hardships in their efforts to obtain health insurance
- Members of certain religious groups
- Members of healthcare sharing ministries
- Incarcerated individuals
- Undocumented immigrants
- Low income individuals who can't afford coverage
- Individuals with coverage gaps of up to three months
- Native Americans eligible for care through the Indian Health Service
The final rule broadens the exemptions for American Indians to include individuals who are eligible to received medical care through the federal Indian Health Service. The Associated Press recently reported that PPACA exempted only American Indians and Alaska Natives who are members of the more than 500 tribes recognized by the U.S. Bureau of Indian Affairs. This final rule will also include the more than 100 tribes that are recognized by states only.
Applications must be filed to support exemption requests. In general the exemptions will be in force only for the calendar year when the application is submitted.
Typically, the state health exchange will be in charge of granting certificates of exemption in the hardship and religious categories. The Internal Revenue Service, however, will exclusively handle the exemptions for illegal immigrants, individuals with household income below the tax filing threshold, individuals who cannot afford coverage, and individuals who experience a short coverage gap through the tax filing process.
The rule provides a choice to individuals for the exemptions in these categories: members of a healthcare sharing ministry, incarcerated individuals, and members of recognized Indian tribes. These exemptions could be provided either through a health insurance exchange or through the IRS.
The rule goes into effect on August 26.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
