What is Form 8965- Health Coverage Exemptions (Obamacare/ACA)?

Due to tax law changes, beginning Jan. 1, 2019, you'll no longer be required to have minimum essential health coverage. 

Form 8965 is used to claim a coverage exemption either granted by the Marketplace (also called the "Exchange") or a coverage exemption for which you are eligible. Form 8962 is also used to calculate your  shared responsibility payment if you did not have health insurance coverage or qualify for a coverage exemption for any specific month during the tax year. 

Who must file this form?
File Form 8965 to claim or report a coverage exemption if all these apply:

• You are filing a Form 1040 in tax year 2018 or in a previous year you are filing a 1040-A, 1040-EZ or a 1040 (even if filing because you are dual status alien for your first year of U.S. residency or a nonresident or dual-status alien who decided to file a joint return with a U.S. spouse),
• No other taxpayer can claim you as a dependent,
• You or someone in your tax household didn't have minimum essential coverage for each month of the tax year, and
• You want to claim or report a coverage exemption for yourself or a member of your tax household. Form 8965 will be included with your tax return.

Not required to file a tax return.
You and your tax household are exempt from the shared responsibility payment if you aren't required to file a tax return. Therefore, you do not need to file a tax return to claim or report a coverage exemption.  If you select to file even though you are not required to, you must claim the coverage exemption, if eligible. 

Individual Shared Responsibility Provision
If for any month during the tax year, if you or any other member of your tax household didn't have health coverage (referred to as "minimum essential coverage") or a coverage exemption, the shared responsibility payment must be calculated. 

• Most people already have health care coverage and will indicate this on their return.
• If you, or any of your dependents, do not have minimum essential coverage or do not have an exemption, you may need to make an Individual Shared Responsibility Payment when you file.
• If you must make an Individual Shared Responsibility Payment, you will owe 1/12^thof the annual payment for each month you or your dependents are without coverage.

For 2015, the annual payment amount was the greater of:

• 2% of your household income that is above the tax return filing threshold* for your filing status, OR
• Your family’s flat dollar amount ($325 per adult, $162.50 per child, maximum amount of $975)

For 2016, the annual payment amount was the greater of:

• 2.5% of your household income that is above the tax return filing threshold* for your filing status, OR
• Your family’s flat dollar amount ($695 per adult, $347.50 per child, maximum amount of $2,085)

For 2017, the annual payment amount was the greater of:

• 2.5 % of your household income that is above the tax return filing threshold for your filing status, OR
• Your family's flat dollar amount ($695 per adult, $347.50 per child, maximum amount $2,085)

For 2018, the annual payment amount is the greater of:

• 2.5% of your household income that is above the tax return filing threshold for your filing status, OR
• Your family's flat dollar amount ($695 per adult, $347.50 per child, maximum amount $2,085)

For 2019, the Health Coverage requirement is expired.

Coverage Exemptions
Individuals who do not have coverage or experience a gap in coverage may qualify for an exemption if:

• Income (gross or household) below filing threshold
• You do not have access to affordable coverage
• You have a gap of less than three consecutive months without coverage
• Certain noncitizens or citizens living abroad
• Members of health care sharing ministry
• Members of Federally-recognized Indian Tribes
• Incarceration (being in jail, prison or similar facility)
• Live in a state that chose not to expand Medicaid
• Members of certain religious sects
• Ineligible for Medicaid because your State does not participate in the Medicaid expansion under the Affordable Care Act.
• Hardships (as determined by the marketplace that it prevented you from getting coverage).
• Two or more family member’s aggregate cost of self-only employee-sponsored coverage exceeds 8.05% of household income
• You are a member of a religious sect recognized by the marketplace.
• You had a child that was born, you adopted a family member into your household or a member of your household died during the tax year.
• Do not have access to affordable coverage based on projected income.
• Specific Medicaid programs that re not considered to be minimum essential coverage.

Exemptions may be obtained in several ways. Some are only from the Marketplace in the area where you live, while others are only from the IRS when you file your return, and others can be obtained from either the Marketplace or the IRS.

2018 Filing Thresholds:

If you, or a member of your household, was granted a Marketplace exemption, complete Part I of Form 8965. If you are claiming a coverage exemption on your tax return, complete Part II or III. You may need to complete more than one part of Form 8965. The exemptions may be claimed in the Health Insurance section of the program.