DEFINITION of 'Hardship Exemption'

An approved excuse from paying a penalty fee for not having health insurance. A hardship exemption can be granted if an individual is in a situation that affects his or her ability to purchase health coverage. Hardship exemptions are a provision in the Patient Protection and Affordable Care Act (ACA), signed into law on March 23, 2010 by President Barack Obama. Starting in 2014, most individuals are required to have an acceptable health-coverage level known as minimum essential coverage, or pay a fee (called the “individual shared responsibility payment”). In certain cases, people can qualify for exemptions, including hardship exemptions, whereby no penalty is assessed for having no insurance.

BREAKING DOWN 'Hardship Exemption'

A hardship exemption may be granted for 12 accepted circumstances:

  • You are homeless.
  • You have been evicted in the last six months or are facing foreclosure.
  • You received a shut-off notice from a utility company.
  • You were the victim of recent domestic violence.
  • You experienced the recent death of a close family member.
  • You experienced a fire, flood or other disaster (either natural or human-caused) that resulted in substantial damage to your property.
  • You filed for bankruptcy during the previous six-month period.
  • You had medical expenses you were unable to pay in the last 24 months.
  • You had unexpected increases in necessary expenses related to caring for an ill, disabled or aging family member.
  • You expect to claim a child as a tax dependent who has been denied coverage in Medicaid and CHIP, and another person is under a court order to provide medical support for the child (in this case, you do not owe the penalty for the child).
  • As a result of an eligibility appeals decision, you can enroll in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you were not enrolled in the QHP.
  • You are ineligible for Medicaid because your state did not expand its eligibility under the ACA.

Eligible individuals can apply for a hardship exemption through the Health Insurance Marketplace.

RELATED TERMS
  1. Minimum Essential Coverage

    The type of health insurance policy an individual needs to meet ...
  2. SEC Form ADV-H

    An application for either a temporary or continuing hardship ...
  3. Health Insurance

    A type of insurance coverage that pays for medical and surgical ...
  4. Exempt Income

    Certain types or amounts of income not subject to federal income ...
  5. Health Insurance Marketplace

    Organizations that facilitate structured and competitive markets ...
  6. Form 1095-B

    An IRS Form sent to individuals who received minimum essential ...
Related Articles
  1. Insurance

    How Catastrophic Health Insurance Works

    Catastrophic health insurance is open to people under 30 and those who qualify by income under the Affordable Care Act. But how exactly does it work?
  2. Insurance

    Jan. 31 is Sunday: Almost No Time to Duck Obamacare Penalty

    If you don't have health insurance, act NOW or you could owe penalties on your 2016 taxes, in addition to this year's.
  3. Insurance

    5 Ways to Ace 2016's Health Insurance Marketplace

    Not sure how the Health Insurance Marketplace/Exchange works? Here are 5 ways to avoid frustration when enrolling through the federal or state exchanges.
  4. Insurance

    Cutting Your Cost for Marketplace Health Insurance

    Here's how you may be able to lower your costs for health insurance coverage in 2016 though the Health Insurance Markerplace.
  5. Insurance

    Beat The Deadline! Cheap Choices in Health Insurance

    Sign up by February 15 - or else pay 2015's higher tax penalty. If you miss the deadline, there are exceptions.
  6. Insurance

    4 Ways to Find Good Health Insurance

    Follow these 4 steps to get the best coverage at the most affordable price.
  7. Retirement

    When a 401(k) Hardship Withdrawal Makes Sense

    If you've exhausted all other avenues, there are ways to withdraw funds before age 59½ – sometimes without the 10% penalty that's usually due.
  8. Insurance

    Health Open Enrollment: Read This Before You Renew

    Time to renew your health plan – or shop for a new one for 2016. Here's how to get the most from marketplace open enrollment for the Affordable Care Act.
  9. Managing Wealth

    How to Avoid Penalties When Postponing Medicare

    The rules and timing can be tricky; here's how to navigate them, without getting dinged by penalties.
RELATED FAQS
  1. I am 52 years old and wish to make a withdrawal from my 401(k) plan. Is there any ...

    Most distributions from qualified retirement plans made to you before you reach the age of 59.5 are subject to an additional ... Read Answer >>
Hot Definitions
  1. Five Cs Of Credit

    A method used by lenders to determine the credit worthiness of potential borrowers. The system weighs five characteristics ...
  2. Straddle

    An options strategy in which the investor holds a position in both a call and put with the same strike price and expiration ...
  3. Trickle-Down Theory

    An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors ...
  4. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that eventually eliminated tariffs to encourage economic activity between the United ...
  5. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  6. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
Trading Center