Individuals who qualify for the Health Coverage Tax Credit (HCTC) but are not enrolled in HCTC-qualifying health insurance coverage may claim a hardship exemption through a limited interim process for the second half of 2016, since the full process will not be available until January 2017. In a guidance document, CMS’ Center for Consumer Information and Insurance Oversight (CCIIO) provided information about the hardship exemption (CCIIO Letter, August 12, 2016).
The HCTC provides a tax credit equal to 72.5 percent of the applicable premium to eligible individuals and their families to help them pay for the cost of HCTC-qualifying health insurance coverage. Most eligible individuals are receiving either certain trade adjustment assistance or payments from the Pension Benefit Guaranty Corporation. Individuals with other specified health coverage, including Medicare, are not eligible for the HCTC. The HCTC expired at the end of 2013; in 2015, it was reinstated retroactive to 2014.
Before the 2013 expiration, individuals received advance HCTC payments for premium assistance. With the reinstated HCTC, the same process as before was expected to be in operation by July 2016, but the IRS will not have that process in place in time. Therefore, a limited interim process will be in place for the second half of 2016, with the original process back in place by January 2017. Some eligible individuals, however, may choose to not use the interim process, may lack access to the interim process, or may be unable to make premium payments without the advance HCTC payments. For those individuals, who are required by section 1501 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) to have qualifying health care coverage, a hardship exemption will be available. All individuals who are eligible for the HCTC but are not enrolled in HCTC-qualifying health insurance coverage between July and December 2016 are entitled to a hardship exemption and will not be subject to the ACA’s penalties under the shared responsibility provisions.
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