ACA Exemption?

[neilbrink]

Can a 3 month duration without health insurance qualify for a short term exemption? 

[easytax]

No, reg says 2 months or less for that exemption.

[Pacun]

Yes, you can be without insurance for three months and let me give some examples and then you will understand better why easy tax is correct.

In 2015, I left my job in March 1st and on March 2nd, my insurance was cancelled. I applied for jobs and I got hired and start working on June 30th and on the same day, I got insurance. I was without health insurance for about 128 days which more than 3 months, but ACA reads that as long as you are insured for 1 day, you are considered insured for the whole month.

Now, if you have a document that read Y Y Y Y N N N Y Y Y Y Y, and no other insurance is involved, don't ask questions and have that person pay the penalty because that document already calculated that one day means the whole month.

[Lion EA]

I agree with Pacun.  The reg reads something like Less than Three Months.  But, they use calendar months; and you have to be without insurance for every day in a calendar month for it to count as a month without insurance.  Count only the whole months without insurance.  Pacun gave a great example of March qualifying as an insured month and June qualifying as an insured month, leaving his only gap April and May for a two month gap or short term exemption.  It was way more than 60 days, but it was only two months using ACA definitions.

Like the Uniform Definition of a Child that's not at all uniform; the IRS definition of time is different for different purposes!  Sometimes it's any part of a month; sometimes we have to count days; sometimes it's hitting an age milestone any time during an entire year.  At least the ACA definition provides the wiggle room in the taxpayer's favor.

[neilbrink]

So, if a person does not have insurance for 3 months (90 day elimination before the insurance kicks in at the new job) can  he use the 2 months as short term, and only penalize him for the 1 month?

[jklcpa]

8 minutes ago, neilbrink said:

So, if a person does not have insurance for 3 months (90 day elimination before the insurance kicks in at the new job) can  he use the 2 months as short term, and only penalize him for the 1 month?

No.

In addition to the example Pacun gave, the other time you may have more than 2 months of gap in coverage and still be ok is if 2 consecutive months are in the current tax year and continues on into the subsequent year, then the taxpayer could use the short coverage exemption for the current year but not the next.

Example:  No coverage for Nov 2015 through Feb 2016 for a total of 4 months. Taxpayer can use the short coverage exception for 2015 (because only Nov & Dec =  2 months lacking insurance) but couldn't use it in 2016. 

[Pacun]

44 minutes ago, neilbrink said:

So, if a person does not have insurance for 3 months (90 day elimination before the insurance kicks in at the new job) can  he use the 2 months as short term, and only penalize him for the 1 month?

jklcpa is correct: NO. That person has to pay penalty for 3 months. If you have a document like the one I showed above and no other insurance involved, don't ask any questions and use the Ns above to check the months without insurance and you will get a penalty for three months.