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I didn’t know I was eligible for Medicaid this year, so I didn’t enroll. Will I have to pay a penalty?

Q. I didn’t know that I was eligible for Medicaid, so I’ve been uninsured the whole year. I’ve enrolled in Medicaid for the new year, but am I going to have to pay a penalty for not enrolling last year?

A. Most likely, no.

There are numerous exemptions from the individual mandate penalty, and at least one of them probably applies in your case.

ACA open enrollment guide

Learn more about ACA’s individual mandate and its penalties in our ebook, The Insider’s Guide to Obamacare’s Open Enrollment.

The two that are most likely to help you are:

  • The exemption for people whose income is under the tax filing threshold. (for the 2015 tax year, this is $10,300 for a single individual, and $20,600 for a married couple filing jointly.)
  • The exemption for people who do not have access to coverage that is considered affordable under the Affordable Care Act.

For the second exemption, there are two tests to determine whether the coverage available to you is considered affordable. The first considers whether or not you have access to an employer-sponsored plan that would cost you less than 9.56 percent of your household income in 2015. (This has increased slightly to 9.66 percent for 2016.)

If you don’t, the second test is to see whether the lowest-cost Bronze plan in the exchange would have been more than 8.05 percent (8.13 percent in 2016) of your household income.

Since you qualified for Medicaid, you would not have qualified for premium subsidies. That means the affordability test for the lowest-cost plan in the exchange would have been based on the full cost of the plan. Across 35 states that use Healthcare.gov, the average lowest-cost Bronze plan was $265/month in 2015. That’s averaged across all enrollees, so the price would be lower for younger enrollees and higher for older enrollees. But if we look at the average premium, it would be $3,180 in total premiums for the year.

For that to be no more than 8.05 percent of your income, you’d have needed to earn at least $37,411 for the year. As a single individual eligible for Medicaid, your income was under $16,242 in 2015 – clearly well below the amount you’d have needed to earn to make a $265/month premium be considered affordable. It’s important to note that the lowest-cost bronze plan available to you would likely be considerably less than $265/month if you’re in your 20s or 30s, although for it to be less than 8.05 percent of your Medicaid-eligible income, the premium would have to have been no more than $115/month (if you’re in a Healthcare.gov state, they have a tool you can use to determine the lowest-cost Bronze premium in your area).

The fact that you were eligible for Medicaid is not factored into the tests for the affordability exemption. Assuming you weren’t eligible to enroll in an affordable employer-sponsored plan, and assuming the lowest-cost Bronze plan in your exchange would have been more than 8.05 percent of your income (which was almost certainly the case), you’re exempt from the penalty.

If your income is low enough that you don’t have to file a tax return, you don’t have to do anything to get your exemption – it’s automatic. If you qualify for the affordability exemption, you can claim it when you file your taxes, or you can fill out an exemption form to obtain it.