Health Coverage Exemption and Form 8965

What Is The Form 8965

Starting with tax year 2014, US taxpayers are required to have health care coverage or have a health coverage exemption. If neither apply, an individual taxpayer must make a shared responsibility payment with their US tax return.

Form 8965 is used to report a health coverage exemption:

• Granted by the Marketplace (Exchange) exemption, or
• To claim an applicable health coverage exemption

The Form 8865 is also used to calculate and report an applicable shared responsibility penalty.

What Health Coverage Exemption Options Are Available On The Form 8965

A health coverage exemption is available either from the Marketplace or by making claim for an applicable exemption on your tax return.

Exemptions that can only be obtained from the Marketplace include:

• Members of a health sharing ministry
• Members of federally recognized Indian tribes
• Incarceration
• Member of a recognized religious sect
• You are an American Indian, Alaska native, or a spouse or descendent of either who is eligible for services through an Indian health care provider
• You are experiencing circumstances that prevent you from obtaining coverage under a qualified health plan
• You do not have access to affordable coverage based on your projected household income
• You are ineligible for Medicaid solely because the state in which you live does not participate in the Medicaid expansion under the Affordable Care Act
• You have been notified that your health insurance policy will not be renewed and you consider the other plans available unaffordable

Health Coverage Exemption options that can be claimed on your return include:

• Coverage is considered unaffordable because the minimum amount you must pay for premiums is more than 8% of your household income
• You went without coverage for less than 3 consecutive months during the year
• You are a US citizen or resident who spent at least 330 full days outside of the U.S. during a 12-month period
• Your household income is below the minimum threshold for filing a tax return
• You are enrolled in certain types of Medicaid and TRICARE programs that are not minimum essential coverage
• You were eligible, but did not purchase a fiscal year employer-sponsored plan that started in 2013 and ended in 2014
• Two or more family members aggregate cost of self-only employer sponsored coverage is more than 8% of household income, as is the cost of any available employer sponsored coverage for the entire family
• You purchased insurance through the Marketplace during the initial enrollment period but have a coverage gap at the beginning of 2014
• You applied for CHIP coverage during the initial open enrollment period and were found eligible for CHIP based on that application but have a coverage gap at the beginning of 2014
• Your gross income is below the filing threshold

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Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.

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