FORT WORTH, texas — Stephanie Daugherty earns too much from her part-time job at a doctor’s office to qualify for Medicaid but not enough to comfortably afford one of the health plans for sale through the federally run insurance exchange that Texas and many states use.
So the 26-year-old nursing student and mother paid a $180 tax penalty — 1 percent of her annual income — to spend another year uninsured.
“I just figured it was cheaper than signing up for health insurance,” said Daugherty, whose 4-year-old son is covered by Medicaid.
With Sunday’s deadline to enroll through the exchange looming, Daugherty met with an exchange adviser at her Fort Worth community college and learned she might not have had to pay the penalty after all.
Daugherty and millions of other low-income, working adults who fall into a so-called coverage gap — ineligible for either federal subsidies or Medicaid — might qualify for an exemption to the penalty.
Nationally, about 4 million people fall into the coverage gap, according to the Kaiser Foundation. The hole has become so noticeable that the Internal Revenue Service on Monday issued a form for taxpayers in the 22 states that didn’t expand Medicaid to claim an exemption if their household income is equal to or less than 138 percent of the federal poverty level, or about $16,104 for an individual or $32,913 for a four-person household.
To make an exemption case, taxpayers must apply for coverage through the insurance exchange. Those denied are directed to Medicaid, and if they do not qualify, they must file the tax form. The penalty will rise to either 2 percent of income or $325, whichever is higher, for individuals this year, and 2.5 percent or $695 in 2016. The Treasury estimates that between 10 percent and 20 percent of taxpayers nationwide will file for an exemption on their 2014 tax returns.
