Source: http://www.taxfreedominstitute.com/avoiding-penalties-under-obamacare.html
Timestamp: 2017-06-26 18:53:14
Document Index: 7783217

Matched Legal Cases: ['§5000', '§1402', '§5000', '§5000', '§1', '§155']

Avoiding Penalties Under ObamacareExceptions and Exemptionsto the "IndividualMandate"
1. Religious conscience exemption – §5000A(d)(2)(A).This provision holds that any member of a recognized religious group that has historically been exempt from Social Security taxes may also be exempt under Obamacare. Tax code §1402(g)(1) defines who is exempt for purposes of Social Security taxes and that definition applies to the penalty under Obamacare.
HCSMs are non-profit religious organizations acting as a clearinghouse for those who have medical expenses and those who wish to share the burden of those medical expenses. HCSMs receive no funding or grants from government sources. HCSMs are not insurance companies. HCSM do not assume any risk or guarantee the payment of any medical bill. Twenty-five states have explicitly recognized this structure and specifically exempt HCSMs from their insurance codes. According to the Alliance of Health Care Sharing Ministries, there are now over 210,000 people participating in these ministries in all fifty states. See: www.healthcaresharing.org.
a. Must be an established 501(c)(3) tax-exempt organization, b. Members must share a common set of “ethical or religious beliefs” and “share medical expenses among members” in accordance with those beliefs and without regard to where the member lives or works,
d. The medical expenses of its members must have been shared “continuously and without interruption” since December 31, 1999, and e. Must undergo an annual audit by “an independent public accounting firm” and the results of the audit must be “made available to the public upon request.” The regulations require that a person establish his eligibility for the exemption on a monthly basis. That is, this appears not to be an annual exemption, but must be verified “for every month of that taxable year for which they seek exemption.” See: Treasury Decision 9632, §III.B; Rev. Reg. §5000A-3(b)(2). It seems that the IRS has put provisions in place to make the process for achieving exemption under this provision as arduous as possible.
3. Persons not lawfully present in the United States – §5000A(d)(3).A person who does not have lawful immigration status is not obligated to have health insurance under the law. A person falls under this exemption if he either is: a) a nonresident alien, or b) is not lawfully present in the U.S. See: Rev. Reg. §1.5000A-3(c)(2). Thus, all the illegal aliens currently in the country have no duty under the law to have insurance. But how do they claim the exemption? The regulations provide no mechanism for doing so. I suppose they will do so that the same way they currently file their tax returns: not at all. Further IRS guidance will be issued on the topic in the future.
A taxpayer’s family means the individuals for whom a taxpayer properly claims a deduction for a personal exemption under section 151 for the taxable year. Family size means the number of individuals in the family. Family and family size may include individuals who are not subject to or are exempt from the penalty under section 5000A for failing to maintain minimum essential coverage. Thus, “household income” includes not only the taxpayer’s wage or business income, but it includes his tax-exempt interest, non-taxable Social Security benefits and non-taxable foreign earned income, plus all of the same income items of every person in his household for whom he claims a dependent exemption. That can include all children up to 24 years of age or a disabled child of any age, any relative that lives with you such as a parent or grandparent, brother, sister, etc., provided they qualify as your dependent exemption on your tax return. The 8 percent premium cap is figured on the basis of this “household income.” In many cases, it will be substantially more than the income reported on your tax return for the period in question. My question is who made the decision that the income of other persons is available to you to pay medical expenses? The 8 percent cap is based upon all the income of the household while it is probably the case that the income of third parties is just not available to cover medical bills. For example, if your seventeen year old son makes $4,800, that will raise your “household income.” However, none of his money is available to you because he spent it all on his car and girlfriend.
7. Members of an Indian tribe – sec 5000A(e)(3). Any person who is a member of an Indian tribe is exempt during the period of his membership. 8. Those with “short coverage gaps” – sec 5000A(e)(4). A “short coverage gap” is defined as:
a. Experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he had a significant, unexpected increase in essential expenses that prevented purchasing coverage under a qualified health plan, b. Would have experienced serious deprivation of food, shelter, clothing or other necessities due to the expense of purchasing a qualified health plan, or c. Experienced other circumstances that prevented purchasing coverage under a qualified health plan. 45 CFR §155.105(g)(1)(i) - (iii).
As discussed in more detail in the following article, there have been many delays in implementing and enforcing Obamacare. Both the employer mandate and individual mandates have been pushed back. Thus, the penalties are not currently being enforced. Because this issue continues to be in a state of massive flux, I will stay on top of it as necessary. Pilla Talks Taxes Subscription Options & Additional Resources