Exempt Individuals

Some categories of individuals are exempt from the requirement to have minimum essential coverage during 2014, which means that they are not subject to the shared responsibility payment. Some of the exemptions are grated by a marketplace and are reported in Part I of Form 8965, Health Coverage Exemptions, which is attached to the individual's U.S. tax return (Form 1040, From 1040A, or Form 1040EZ). Part II and III of Form 8965 will claim the other exemptions. Each household must file only one Form 8965.

Types of Coverage Exemptions

Coverage Exemption Marketplace ECN Required Tax Return Code Required
Coverage is considered unaffordable
You cannot afford coverage because the minimum amount you must pay for premiums is more than 8.05% of your household income, after the potential offset of a subsidy is applied.
NoYes
Short Coverage Gap
You went without coverage for 2 consecutive months or less during the year.
(A gap of 3+ months and other gaps are still liable for the penalty.)
NoYes
Citizens living abroad and certain non-citizens
• A U.S. citizen or resident who spent at least 330 full days outside of the U.S. during a 12-month period,
• A U.S. citizen who is a bona fide resident of a foreign country or U.S. territory, or
• Neither a U.S. citizen or U.S. national nor an alien lawfully present in the U.S.
NoYes
Household income below the filing threshold
Your household income is below the minimum threshold for filing a tax return.
NoYes
Members of a health care sharing ministry
You are a member of a health care sharing ministry.
YesYes
Members of Federally-recognized Native American tribe
You are a member of a Federally-recognized Native American tribe.
YesYes
Incarceration
You are in a jail, prison, or similar penal institution or correctional facility after the disposition of charges.
YesYes
Members of certain religious sects
You are a member of a recognized religious sect for a minimum of two years.
YesNo

Hardships

Coverage Exemption Marketplace ECN Required Tax Return Code Required
Two or more members' aggregate cost of self-only employer-sponsored covreage is more than 8% of household income, as is the cost of any available employer-sponsored coverage for the entire family. NoYes
You purchased insurance through the Marketplace during the initial enrollment period but have a coverage gap at the beginning of 2014. NoYes
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. NoYes
You are a Native American, Alaska native, or a spouse or descendent of either who is eligible for services through a Native American health care provider. YesYes
Your gross income is below the filing threshold. NoYes
You are experiencing circumstances that prevent you from obtaining coverage under a qualified health plan. YesNo
You do not have access to affordable coverage baed on your projected household income. YesNo
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. YesNo
You have been notified that your health insurance policy will not be renewed and you consider the other plans available unaffordable. YesNo

Except for the clearly defined exemptions above, the IRS will not determine whether an individual qualifies for a hardship exemption. Only the Healthcare Marketplace can grant an exemption for individuals who are experiencing hardships that prevent them from obtaining coverage. Individuals in the following circumstances may qualify for hardship exemption through the Healthcare Martketplace at: http://www.healthcare.gov/exemptions/

Each application for the above circumstances must also be accompanied with an explanation how the hardship affected your ability to obtain health insurance.


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