|Under Obamacare, the Individual Shared Responsibility Provision requires each person (1) to have minimum essential health coverage, (2) qualify for an exemption, or (3) make a payment on the filing of his or her tax return.
Per the IRS, there are nine exemptions:
1.Religious conscience. You are a member of a religious sect that is recognized as conscientiously opposed to accepting any insurance benefits.
2.Health care sharing ministry. You are a member of a recognized health care sharing ministry.
3.Indian tribes. You are a member of a federally recognized Indian tribe.
4.No filing requirement. Your income is below the minimum threshold for filing a tax return.
5.Short coverage gap. You went without coverage for less than three consecutive months during the year.
6.Hardship. The Health Insurance Marketplace, also known as the Affordable Insurance Exchange, has certified that you have suffered a hardship that makes you unable to obtain coverage.
7.Unaffordable coverage options. You can't afford coverage because the minimum amount you must pay for the premiums is more than eight percent of your household income.
8.Incarceration. You are in a jail, prison, or similar penal institution or correctional facility after the disposition of charges against you.
9.Not lawfully present. You are not a U.S. citizen, a U.S. national or an alien lawfully present in the U.S.
If you do not have coverage or you do not meet one of the exemptions, you are required to make a shared responsibility payment. However, it appears that the shared responsibility payment will not be treated as an ordinary tax.
First, if you fail to make a shared responsibility payment, the IRS may not impose an accuracy related penalty, as it would with an ordinary tax. Second, the IRS is barred from issuing a notice of lien against your property or levy against your bank account, for instance. Third, a failure to pay does not subject the taxpayer to criminal penalties. However, if you do owe a shared responsibility payment, the IRS may take some or all of any tax refund you would otherwise receive, in order to satisfy your obligation under the Act.
The divided nature of the tax is again present in how exemptions are claimed. Notably, those claiming a religious conscience exemption and many other exemptions must go to the Health Insurance Marketplace and apply for an exemption certificate. Yet, those claiming unaffordable coverage and other hardships must claim these when filing their federal income tax returns.
See the IRS' official guidance in 26 CFR §1.5000A-5 in the Federal Register, or the official guidance from the Department of Health and Human Services.