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CandleFocus Glossary Editor
The term “hardship exemption” refers to a provision allowing individuals in certain circumstances to be exempt from a provision of the Affordable Care Act (ACA) known as the individual mandate. The individual mandate was a requirement that all individuals get health insurance from certain government-approved insurance providers to protect their health and their financial stability. In order to avoid having to pay a “shared responsibility payment” for not having health insurance, individuals who met certain exceptions were allowed to have a “hardship exemption” to the individual mandate.
Hardship exemptions were granted to people in a number of different situations. Most notably, individuals who had recently become homeless or suffered an eviction were allowed to seek a hardship exemption. This was meant to provide individuals who had suffered some form of financial misfortune – such as a job loss or a significant decrease in income – with the opportunity to focus their finances on overcoming the immediate hardship instead of having to pay for health care coverage.
Victims of domestic abuse were also granted hardship exemptions to the individual mandate. Often, these situations can lead to financial instability and the loss of health care coverage due to job changes or the inability to access previously-obtained coverage. In these cases, a hardship exemption provided some relief from having to pay for health care coverage, and allowed victims of domestic abuse to more readily access social services, mental health resources, and health care services created to assist victims of abuse.
Finally, individuals who had declared bankruptcy and were in the early stages of the recovery process were also allowed a hardship exemption. By temporarily providing relief from having to pay for health care coverage, the hardship exemption provided individuals with the breathing room to establish financial stability after declaring bankruptcy.
The individual mandate and the associated hardship exemptions were eliminated in 2019, when the Tax Cuts and Jobs Act was passed. As a result, individual who were previously eligible for a hardship exemption are now no longer required to purchase health care coverage, nor would they be assessed a “shared responsibility payment” for not having health insurance.
For individuals who are currently undergoing financial hardship, the elimination of the individual mandate and the associated hardship exemptions may provide a financial relief and the opportunity to better focus their limited resources. However, for those individuals who need health care coverage, navigating the insurance marketplace and learning about the different options available to them may prove to be a difficult and time-consuming process. Individuals in this position should consider consulting a professional, such as a financial advisor or an insurance agent, to help them find a plan that best suits their needs.
Hardship exemptions were granted to people in a number of different situations. Most notably, individuals who had recently become homeless or suffered an eviction were allowed to seek a hardship exemption. This was meant to provide individuals who had suffered some form of financial misfortune – such as a job loss or a significant decrease in income – with the opportunity to focus their finances on overcoming the immediate hardship instead of having to pay for health care coverage.
Victims of domestic abuse were also granted hardship exemptions to the individual mandate. Often, these situations can lead to financial instability and the loss of health care coverage due to job changes or the inability to access previously-obtained coverage. In these cases, a hardship exemption provided some relief from having to pay for health care coverage, and allowed victims of domestic abuse to more readily access social services, mental health resources, and health care services created to assist victims of abuse.
Finally, individuals who had declared bankruptcy and were in the early stages of the recovery process were also allowed a hardship exemption. By temporarily providing relief from having to pay for health care coverage, the hardship exemption provided individuals with the breathing room to establish financial stability after declaring bankruptcy.
The individual mandate and the associated hardship exemptions were eliminated in 2019, when the Tax Cuts and Jobs Act was passed. As a result, individual who were previously eligible for a hardship exemption are now no longer required to purchase health care coverage, nor would they be assessed a “shared responsibility payment” for not having health insurance.
For individuals who are currently undergoing financial hardship, the elimination of the individual mandate and the associated hardship exemptions may provide a financial relief and the opportunity to better focus their limited resources. However, for those individuals who need health care coverage, navigating the insurance marketplace and learning about the different options available to them may prove to be a difficult and time-consuming process. Individuals in this position should consider consulting a professional, such as a financial advisor or an insurance agent, to help them find a plan that best suits their needs.