Delilah is 58, single and works as an independent contractor. During 2016 she ma
ID: 2567624 • Letter: D
Question
Delilah is 58, single and works as an independent contractor. During 2016 she made $34,000. She was eligible for health coverage on the online marketplace Connect for Health Colorado. Her insurance premiums would cost her $175/month. She felt morally opposed to the notion that the government was forcing her to purchase health coverage; because of her beliefs she did not purchase health coverage for 2016.
She can claim the Coverage Considered Unaffordable exemption.
She can claim the Members of Certain Religious Sects exemption.
She can claim a General Hardship exemption.
She does not qualify for an exemption and must pay the penalty.
Cesar is 35, single, works as a receptionist in Colorado and made $30,000 in 2016. At the beginning of 2016, Cesar was offered a health coverage plan through his employer. The plan would cost him $235 in premiums each month. Cesar declined the offer and went without health coverage for the entire year. He had no other source of income.
He can claim the Coverage Considered Unaffordable exemption.
He can claim the General Hardship exemption.
He can claim the Aggregate self-only coverage considered unaffordable.
He does not qualify for an exemption and must pay the penalty.
Explanation / Answer
Answer 1:
An “Unaffordable exemption” is allowed when insurance premium to be paid costs more than 8.16% of an individual’s annual income. Herein, since the premium for Delilah stands for 6.18% [($175)/($34,000/12)], she can’t claim “Unaffordable exemption”.
To claim “Members of Certain Religious Sects exemption”, an individual must belong to one of the listed groups by IRS. Since no information regarding Delilah’s membership in any such group is given, she can’t claim the exemption.
A hardship exemption is allowed when an individual faces a situation that makes paying the premium hard for the individual. There are almost 14 situations listed by IRS. However, Delilah doesn’t have any such situation and hence, she can’t claim this exemption as well.
Hence, she would need to pay the penalty and “Option 4” is correct.
Answer 2:
Monthly Income of Cesar = $30,000/12 = $2,500
Monthly Premium = $235
Percentage to income = $235/$2,500 = 9.40%
Since the premium cost is more than 8.16% of Cesar’s income, she can claim “Unaffordable Exemption”. Hence, Option 1 is correct.
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