Confused about the Affordable Care Act? You’re not the only one.

At the risk of repeating information written more eloquently and clearly elsewhere, following are some of the top questions our clients have asked in relation to the Affordable Care Act (ACA).

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1. What is the “individual mandate?”

The individual mandate states that all individuals must obtain suitable health insurance covering minimum essential care, qualify for an exemption, or pay a penalty.


2. How do I know if my insurance provides “minimum essential coverage?”

Since the ACA was enacted, most insurance companies have structured their health insurance policies in such a way that they meet the requirements of this mandate. However, if you have purchased health insurance, either individually or through your employer, you should check with the insurer (or your employer) to make sure your plan qualifies as minimum essential coverage.


3. How can I be exempt from the individual mandate?

While there are numerous possible exemptions, following are the three most common to our clients:

  1. You don’t have to file an income tax return because your income is too low – If you don’t need to file an income tax return, you are automatically exempt from the individual mandate. For most individuals, the 2014 filing thresholds are $10,150 for single taxpayers and $20,300 for married taxpayers filing a joint return.
  2. You are a member of a recognized health care sharing ministry – Members of groups such as Samaritan Ministries, South East Mennonite Medical Aid (SEMMA), or the Ohio Brotherhood Hospitalization Plan (BHP) are exempt from the individual mandate. Many churches have also met the necessary requirements to have their medical plans qualify as sharing ministries under this provision. You must be a member of the sharing ministry for portions of at least 10 months of each year to qualify for a full exemption.
  3. You are a member of “a recognized religious sect with religious objections to insurance, including Social Security and Medicare.” In other words, if your church is eligible to sign Form 4029 on behalf of its members, you qualify for an exemption from the individual mandate even if you are not personally Social Security exempt.

For a full list of exemptions from the individual mandate, visit and type “Exemptions” in the search box at the top of the page.


4. Do I need approval in order to be exempt?

The answer to this question varies depending on which exemption you are claiming.

  • If you are claiming the low income exemption, you do not need to do anything. You are automatically exempt.
  • If you are claiming an exemption as a member of a recognized heath care sharing ministry, you have two options:
    • Complete this form to claim the exemption. After processing, you will receive an exemption number from Health & Human Services, which will be used to claim the exemption on your tax return.
    • Claim the exemption on your tax return without pre-approval. This eliminates the extra form, but also cuts out the assurance that HHS recognizes the ministry of which you are a member. If you take this route, make sure you keep evidence in your files to prove your membership of the health sharing ministry in the event of an IRS audit of your tax return.
  • If you are claiming an exemption as a member of a recognized religious sect, you must complete this form to claim the exemption.

When you file with HHS for exemption as a member of a health care sharing ministry or a recognized religious sect, you will receive an exemption number from the Health Insurance Marketplace. This exemption number will be placed on your 2014 income tax return to exempt you from the individual mandate penalty.

Prefer to simply discuss your situation with us and have us take care of all the necessary paperwork? Click Here!


5. What are the penalties if I don’t comply?

Penalties are calculated as a percentage of gross income, with a minimum and maximum. These amounts change each year, and are scheduled to increase sharply over the next several years. For tax year 2014, these penalties are as follows:

  • 1% of taxable income
  • Minimum $95 per adult in the household, $47.50 per child under 18. This minimum caps at $285/family
  • Maximum penalty is the national average cost of an Obamacare-compliant medical insurance plan, or approximately $2,448 for an individual and $12,240 for a family with five or more members.


6. I’ve heard that the IRS can’t penalize me if I don’t comply with this requirement. Is that true?

Yes and no. The IRS cannot place liens on your property or levy your bank account in order to collect the individual responsibility payment, as they can for unpaid income taxes. However, they can (and will) garnish any refunds you may be expecting. This will apply for as many years as the balance remains unpaid, up to a maximum of 10 years from when the penalty is assessed. They will also assess additional penalties and interest for late payment of this penalty.

In addition to the legal inconveniences associated with not paying this penalty, there are the ethical considerations. At Yoder Financial Services, we consider this penalty to be an additional tax owed to the government, and may decline to assist you with your tax account problems if you willfully refuse to comply with the law, including the individual mandate.


7. Where can I learn more?

Visit for more information about the Affordable Care Act, including the individual mandate.

Another helpful website is A word of caution: This website is individually owned and managed, so any advice from this site should be confirmed with a tax or insurance expert before being relied upon.

Tax provisions of the ACA are addressed on the IRS' website here.

Prefer to simply discuss your situation with us and have us take care of all the necessary paperwork? Click Here!

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