Individual shared responsibility provision – Exemptions: Claiming or reporting

The individual shared responsibility provision of the Affordable Care Act requires taxpayers to have qualifying health coverage (also known as minimum essential coverage), qualify for a coverage exemption, or make an individual shared responsibility payment when filing their federal income tax return. 

For tax year 2019 and 2020 returns

Under the Tax Cuts and Jobs Act, the amount of the individual shared responsibility payment is reduced to zero for months beginning after December 31, 2018.

Beginning in Tax Year 2019, Forms 1040 and 1040-SR will not have the “full-year health care coverage or exempt” box and Form 8965, Health Coverage Exemptions, will no longer be used. You need not make a shared responsibility payment or file Form 8965, Health Coverage Exemptions, with your tax return if you don’t have a minimum essential coverage for part or all of the year.

For tax year 2018 and prior returns

Under the Tax Cuts and Jobs Act, taxpayers must continue to report coverage, qualify for an exemption, or make an individual shared responsibility payment for tax years 2017 and 2018.

For Tax Year 2018, the IRS will not consider a return complete and accurate if the taxpayer does not report coverage for the year, claim an exemption from the coverage requirement or report a shared responsibility payment.

Most taxpayers have qualifying health care coverage for all 12 months in the year. You will now check that box if you, your spouse (if filing jointly), and anyone you can or do claim as a dependent had:

• qualifying health care coverage, or
• a coverage exemption that covered all of 2018, or
• a combination of qualifying health care coverage and coverage exemptions for every month of 2018. If you can check the box on Form 1040, you don’t need to file Form 8965, Health Coverage Exemptions.

Taxpayers who are not otherwise required to file a tax return, do not need to file a return solely to report coverage or to claim an exemption from the coverage requirement. 

Most exemptions are claimed when you file your return

You can claim most exemptions when you file your tax return.

Check the box if you had qualifying health care coverage (called minimum essential coverage) or a coverage ex-emption that covered all of 2018 or a combination of qualifying health care coverage and coverage exemption(s) for yourself, your spouse (if filing jointly), and anyone you can or do claim as a dependent. If you can check the box, you don't have to file Form 8965 to claim any coverage exemptions, including the coverage exemption for household income below the filing threshold.

If you are not required to file a federal income tax return for a year because your gross income is below your return filing threshold, you are automatically exempt from the shared responsibility provision for that year and do not need to take any further action to secure an exemption. Therefore, you do not need to file a return solely to report your coverage or to claim a coverage exemption.

See the instructions for Form 8965, Health Coverage Exemptions for more information.

Marketplace exemptions must be granted in advance and reported when you file your return

While you can claim most exemptions from coverage when you file your tax return, certain exemptions must be granted by the Health Insurance Marketplace in advance. This includes coverage exemptions for certain hardship situations and for members of certain religious sects. 

If you can claim the coverage exemption on your tax return, you do not need to apply for a Marketplace-granted exemption.

If the Marketplace grants your coverage exemption, they will send you a notice with your unique Exemption Certificate Number or ECN. Keep this notice with other important tax information. 

When you file your tax return, enter your ECN on Form 8965 in column C of Part I, Marketplace-Granted Coverage Exemptions for Individuals.

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.  

You’ll submit one Form 8965 with your return and use separate lines for each individual and exemption type claimed on the return. Form 8965 can be filed electronically with your tax return.

Exemptions and who grants them

Exemption must be granted by the Marketplace or claimed on an income tax return. See the Instructions for Form 8965, Health Coverage Exemptions, for more information about exemptions claimed the tax return. For additional information about how to get exemptions that the Marketplace may grant, visit HealthCare.gov/exemptions.

Exemptions that may only be granted by a Marketplace

• Members of certain religious sects – The Marketplace determined that you are a member of a religious sect in existence since December 31, 1950, that is recognized by the Social Security Administration (SSA) as conscientiously opposed to accepting any insurance benefits, including Medicare and Social Security.
• Coverage considered unaffordable based on projected income – The Marketplace determined that you do not have access to coverage that is considered affordable based on your projected household income.
• Determined ineligible for Medicaid in a state that did not expand Medicaid coverage – The Marketplace found that you would have been determined ineligible for Medicaid solely because the State in which you live does not participate in Medicaid expansion under the Affordable Care Act.

Additional Information                                                         

For any month that you or your dependents do not have coverage or qualify for an exemption, you will have to make a shared responsibility payment. See our Individual Shared Responsibility Provision – Reporting and Calculating the Payment page for more information about the payment. 

Learn more about exemptions in this chart and in questions 21-24 of our Questions and Answers. For more information on Marketplace granted exemptions, you can also visit Healthcare.gov and access HHS guidance and Questions and Answers.