Here’s the

IRS Chart of Exemptions  to avoid the Individual Mandate

which doesn’t end till 2019    and  $695 or 2.5% Penalty.  It’s reported that 90% of those who do not have coverage qualify for an exemption from the Penalty (Calif Health Line)

This chart shows all of the coverage exemptions available for 2017, including information about where each can be obtained and the code that is to be used on Form 8965 when you claim the exemption. If your coverage exemption was granted by the Marketplace, you will need to enter the Exemption Certificate Number (ECN) provided by the Marketplace (see the instructions for Part I). For additional detail about the eligibility rules for the coverage exemptions that are claimed on the tax return, see the instructions for Parts II and III, later.

Coverage Exemption Granted by Marketplace Claimed on Tax Return Code for Exemption
Income below the filing threshold—Your gross income or your household income was less than your applicable minimum threshold for filing a tax return. No Code
See Part II
Coverage considered unaffordable—The required contribution is more than 8.16% of your household income. A
Short coverage gap—You went without coverage for less than 3 consecutive months during the year. B
Citizens living abroad and certain noncitizens—You were:

  • A U.S. citizen or a resident alien who was physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months;
  • A U.S. citizen who was a bona fide resident of a foreign country or countries for an uninterrupted period that includes the entire tax year;
  • A bona fide resident of a U.S. territory;
  • A resident alien who was a citizen or national of a foreign country with which the U.S. has an income tax treaty with a nondiscrimination clause, and you were a bona fide resident of a foreign country for an uninterrupted period that includes the entire tax year;
  • Not lawfully present in the U.S and not a U.S. citizen or U.S. national. For more information about who is treated as lawfully present in the U.S. for purposes of this coverage exemption, visitwww.HealthCare.gov; or
  • A nonresident alien, including (1) a dual-status alien in the first year of U.S. residency and (2) a nonresident alien or dual-status alien who elects to file a joint return with a U.S. spouse. This exemption doesn’t apply if you are a nonresident alien for 2017, but met certain presence requirements and elected to be treated as a resident alien. For more information, see Pub. 519.
C
Members of a health care sharing ministry—You were a member of a health care sharing ministry. D
Members of Indian tribes—You were either a member of a Federally-recognized Indian tribe, including an Alaska Native Claims Settlement Act (ANCSA) Corporation Shareholder (regional or village), or you were otherwise eligible for services through an Indian health care provider or the Indian Health Service. * E
Incarceration—You were in a jail, prison, or similar penal institution or correctional facility after the disposition of charges. F
Aggregate self-only coverage considered unaffordable—Two or more family members’ aggregate cost of self-only employer-sponsored coverage was more than 8.16% of household income, as was the cost of any available employer-sponsored coverage for the entire family. G
Resident of a state that didn’t expand Medicaid—Your household income was below 138% of the federal poverty line for your family size and at any time in 2017 you resided in a state that didn’t participate in the Medicaid expansion under the Affordable Care Act. G
Member of tax household born or adopted during the year—The months before and including the month that an individual was added to your tax household by birth or adoption. You should claim this exemption only if you also are claiming another exemption on your Form 8965. H
Member of tax household died during the year—The months after the month that a member of your tax household died during the year. You should claim this exemption only if you also are claiming another exemption on your Form 8965. H
Members of certain religious sects—The Marketplace determined that you are a member of a recognized religious sect. Need ECN
See Part I
Ineligible for Medicaid based on a state’s decision not to expand Medicaid coverage—The Marketplace found that you would have been determined ineligible for Medicaid solely because the state in which you resided didn’t participate in Medicaid expansion under the Affordable Care Act. Need ECN
See Part I
General hardship—The Marketplace determined that you experienced a hardship that prevented you from obtaining coverage under a qualified health plan. Need ECN
See Part I
Coverage considered unaffordable based on projected income—The Marketplace determined that you didn’t have access to coverage that is considered affordable based on your projected household income. Need ECN
See Part I
Certain Medicaid programs that are not minimum essential coverage—The Marketplace determined that you were (1) enrolled in Medicaid coverage provided to a pregnant woman that isn’t recognized as minimum essential coverage; (2) enrolled in Medicaid coverage provided to a medically needy individual (also known as Spend-down Medicaid or Share-of-Cost Medicaid) that isn’t recognized as minimum essential coverage; or (3) enrolled in Medicaid coverage provided to a medically needy individual and were without coverage for other months because the spend-down had not been met. Need ECN
See Part I
*The coverage exemption for members of Indian tribes is no longer granted by the Marketplace, except in Connecticut. See the instructions for Part I, later, to claim the exemption.

IRS Form 8965 – Health Coverage Exemptions

Instructions PDF  – HTML  including penalty calculation

8965
Health Coverage Exemptions #8965

 

Avoid the penalty in the future, get coverage NOW
Free Quotes & Subsidy Calculation. 

Open Enrollment,   Special Enrollment

 

Special Enrollment – Reasons, Triggers, Qualifications

8965.instructions

Form 8965 Exemptions & Mandate Penalty – InstructionsIRS Form 8965 – Health Coverage Exemptions

Instructions – including penalty calculation

 

Resources, Links & Forms

IRS Publication #5187 – What’s new in the Health Care Law,  Instructions for Exemptions are on Page 6

Exemption Application # 0938-1190 (If you have trouble opening up the 6 page pdf, try using a different viewer.  If all else fails, email us for a copy.

Instructions #11746

US Treasury Fact Sheets on Exemptions

Exemption Explanation from Tower’s Watson

Health Care.Gov on exemptions   –  Covered CA, basically just sends one to Health Care.gov

Findlaw on Exemptions

Avoid the penalty in the future, get coverage NOW.
Free Quotes & Subsidy Calculation.  Open Enrollment,   Special Enrollment

 

Special Enrollment – Reasons, Triggers, Qualifications

 

Insure Buy International Medical Coverage

InsuBuy International Medical Coverage – Instant Quotes & Enrollment

Visit our Medicare affiliate CA  Blue Cross  or  Blue Shieldwebsites

Click here for
complementary Long Term Care Proposal

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Is your Family Protected with Life Insurance? Click here for Instant Quote

 

Child & Related Pages

in Individual Mandate – Shared Responsibility  Section

FAQ – What if you were out of country and didn’t have a residence to calculate if premiums were over 8%?

26 USC §5000A pdf  –  Requirement to Maintain Minimum Essential Coverage  and exemptions

 

Review Your Health Coverage Exemption Options

The individual shared responsibility provision requires you, your spouse, and your dependents to have qualifying health insurance for the entire year, report a health coverage exemption, or make a shared responsibility payment when you file. If you are applying for an exemption from the Marketplace, you should prepare early by reviewing your options and determining if you are eligible for an exemption from the requirement to have coverage.

How you get a health coverage exemption depends on the type of exemption. The IRS has posted a chart listing the types of exemptions and how to obtain them on IRS.gov/aca. You can obtain some exemptions only from the Marketplace while others you may claim when you file your tax return. You can get some exemptions by either applying for the exemption from the Marketplace or claiming it on your return.

Marketplace Exemptions

If you are eligible for an exemption from the Marketplace, you apply for it by filling out an exemption application that you then send to the Marketplace. If the Marketplace grants your coverage exemption, they will send you a notice with your unique Exemption Certificate Number. Keep this notice with your other important tax information. You will use the ECN when you file your tax return. Be sure to apply early so that you will receive this notice before you file your tax return. Hardship exemptions are among those exemptions that you must request through the Marketplace. To qualify for a hardship exemption you must have experienced circumstances that prevented you from obtaining coverage under a qualified health plan. Those circumstances include homelessness, eviction, foreclosure, domestic violence, death of a close family member and unpaid medical bills.

For more information about obtaining exemption from the Marketplace, go to HealthCare.gov.

IRS Exemptions

For a health coverage exemption that you qualify to claim on your tax return, you do not need to call or obtain the exemption from the IRS in advance. All you need to do is complete Form 8965, Health Coverage Exemptions Part III and file it with your tax return. Use a separate line for each individual and exemption type claimed on the return.

If you do not have coverage and your income is below the filing requirement threshold for your filing status, you and your family are exempt and you will not have to make a shared responsibility payment. In this situation, you do not have to file a return to claim the coverage exemption. However, if you choose to file a return, then you will use Part II of Form 8965, Coverage Exemptions for Your Household Claimed on Your Return. Exemptions that you can claim on your tax return include exemptions for lack of affordable coverage, a short coverage gap, non-citizens not lawfully present in the United States, and certain citizens living abroad.

Find out if you qualify for an exemption by using our interactive tool, Am I required to make an Individual Shared Responsibility Payment. For information about claiming and reporting exemptions, visit IRS.gov/aca.

§5000A (4)  Requirement to maintain minimum essential coverage

Individuals residing outside United States or residents of territories Any applicable individual shall be treated as having minimum essential coverage for any month—

          (A) if such month occurs during any period described in subparagraph (A) or (B) of section 911(d)(1) which is applicable to the individual, or

          (B) if such individual is a bona fide resident of any possession of the United States (as determined under section 937(a)) for such month.

911(d)(1)  Citizens or residents of the United States living abroad

Definitions and special rules

For purposes of this section—

(1) Qualified individual The term “qualified individual” means an individual whose tax home is in a foreign country and who is—

(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or

(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period.

Washington Post 12.19.2013  – Mandate does not apply to those whose policies were cancelled.  (Sebillus Letter)

Obtaining and Claiming a Health Coverage Exemption

The Affordable Care Act requires you and each member of your family to have minimum essential coverage, qualify for an insurance coverage exemption, or make an individual shared responsibility payment for months without coverage or an exemption when you file your federal income tax return.

You, your spouse or your dependents may be eligible to claim an exemption from the requirement to have coverage and are not required to make a payment. .For any month that you do not qualify for a coverage exemption, you will need to have minimum essential coverage or make a shared responsibility payment.

You can claim most exemptions when you file your tax return. However, you must apply for certain exemptions in advance through the Health Insurance Marketplace, You may be exempt if:

  • The minimum amount you must pay for the annual premiums is more than 8.05 percent of your household income
  • You have a gap in coverage that is less than three consecutive months
  • You qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement

Claiming an exemption when you file

You will claim or report coverage exemptions on Form 8965, Health Coverage Exemptions, and attach it to Form 1040, Form 1040A, or Form 1040EZ. You can file each of these forms electronically.

If your income is below your filing threshold and you are not required to file a tax return, you are eligible for an automatic exemption and you do not have to file a tax return to claim it. You do not need to file a return solely to report your coverage or to claim a coverage exemption.

However, if you choose to file a tax return, you will use Part II, Coverage Exemptions for Your Household Claimed on Your Return, of Form 8965 to claim a health coverage exemption. You should not make an individual shared responsibility payment if you qualify for this exemption because your income is below the filing threshold.

You can claim other IRS-granted coverage exemptions on your tax return using Part III, Coverage Exemptions for Individuals Claimed on Your Return, of Form 8965.  For a coverage exemption that you qualify to claim on your tax return, all you need to do is file Form 8965 with your tax return.  You do not need to contact the IRS to obtain an exemption in advance.

Reporting Marketplace granted exemptions

If you are granted a coverage exemption from the Marketplace, they will send you a notice with your unique Exemption Certificate Number or ECN. You will enter your ECN in Part I, Marketplace-Granted Coverage Exemptions for Individuals, of Form 8965 in Column C.

If the Marketplace hasn’t processed your exemption application before you file your tax return, complete Part I of Form 8965 and enter “pending” in Column C for each person listed. If you can claim the exemption on your return, you do not need an ECN from the Marketplace.

Filing Electronically

Taxpayers and their tax professionals should consider filing returns electronically. Using tax preparation software is the best and simplest way to file a complete and accurate tax return as it guides individuals and tax preparers through the process and does all the math. There are a variety of electronic filing options, including free volunteer assistance, IRS Free File for taxpayers who qualify, commercial software, and professional assistance.

More Information

Form 8965, Health Coverage Exemptions

For more information about the Affordable Care Act and filing your 2015 income tax return, visit IRS.gov/aca.

Subscribe to IRS Tax Tips to receive easy-to-ready tips from the IRS by e-mail.

 

Find Out More about Income-Based Health Coverage Exemptions

The individual shared responsibility provision requires you and each member of your family to have health care coverage, have an exemption from the coverage requirement, or make an individual shared responsibility payment for any month without coverage or an exemption when you file your federal income tax return.

You do not need to file a return solely to report your coverage or to claim an exemption if you are not otherwise required to file.

If you are not filing a federal income tax return because your gross income is below your return filing threshold, you are automatically exempt from the shared responsibility provision for that year. You do not need to file a tax return to claim an exemption from coverage and you should not make an individual shared responsibility payment.

If you are not required to file a tax return for a year but choose to file one anyway, you should claim the coverage exemption on Form 8962, Health Coverage Exemptions, when you file your tax return.

To learn more about coverage exemptions, visit IRS.gov/aca, or use our interactive tool, Am I Eligible for a Coverage Exemption or Required to Make an Individual Shared Responsibility Payment?

You or your tax professional should consider preparing and filing your tax return electronically. Using tax preparation software is the easiest way to file a complete and accurate tax return. There are a variety of electronic filing options, including free volunteer assistance, IRS Free File for taxpayers who qualify, commercial software, and professional assistance.

 

Historical

extended to 4.30.2015 if you didn’t know about the mandate tax penalty!

Lenience for  non grandfathered policies that were cancelled.

Sebillus Letter ♦ HHS Guidance  ♦  Federal Hardship Exemption Form  ♦  Wall Street Journal  ♦  Washington Post 12.19.2013  ♦  Catastrophic Guidance 

Washington Post 12.19.2013  – Mandate does not apply to those whose policies were cancelled.  (Sebillus Letter)

8 comments on “Exemptions from Mandate Penalty IRS Form #8965

  1. 1. In 2015 I only had international insurance for 4 months before

    2. my medicare started in may.

    3. I lived in Mexico more the 330 day exemption for living abroad.

    4. The health insurance form 8965 asks for exemption certificate # in part II, and asks for exemption type in part III.

    5. What do I put in those columns.

    • The instruction for Form #8965 page 3 say the Code for Exemption is “C” and it’s claimed on your return. It doesn’t require Covered CA to grant the exemption.

      Thanks for pointing out that I had linked to the 2014 Form 8965.

      I think you are confusing the parts…

      …..Part 1 is for market place granted exemptions
      …..Part 2 Household Exemptions
      …..Part 3 Line 8 Column C is where you would put “C” for your exemption as living out of country.

      I’m not a CPA… Free Tax Advise is available at VITA.

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