If you did not have healthcare coverage then you could face a tax penalty under the Affordable Care Act, known as the "Shared Responsibility Payment." But this is not true for everyone, especially low-income households. You may qualify for an "exemption" from the Shared Responsibility Payment. In that case, you would not have to pay the penalty. Report your exempt status on Form 8965; file this with your tax return.
There are two types of exemptions. The first type must be approved by filing a paper application to the marketplace. The second type can be granted by the IRS on your tax return. If an exemption is approved by the marketplace, you will receive an exemption certificate number which is a 6 digit letter/number code that you will enter on Form 8965 when filing your return. If you are eligible for an exemption from the IRS, enter your exemption type on Form 8965 using the letters A through G. Find a chart of the exemptions and the corresponding letters in the instructions for Form 8965. The exemptions claimed on the tax return apply to both the federal and state run marketplaces.
1. Members of health care sharing ministry (also available on the return)
2. Members of Federally recognized Indian tribes or eligible for Indian health care services (also available on the return)
3. Incarceration (also available on the return) can be claimed for any months someone on the tax return was in jail, prison, or a similar penal institution or correctional facility, for at least one day in the month (doesn’t include probation, parole, home confinement, or time in jail when you weren’t convicted of a crime)
4. Members of certain religious sects who object to insurance coverage, including Medicare and Social Security (e.g. Mennonite, Amish)
5. Determined ineligible for Medicaid in a state that did not expand Medicaid (which includes Maine). Available to low-income adults (less than 138% of the Federal Poverty Level)
6. General Hardships that prevented you from obtaining coverage under a qualified health plan. These may be:
Note: Documentation is required in most circumstances.
7. Coverage considered unaffordable based on projected income
8. Unable to renew existing coverage
9. You receive AmeriCorps coverage
1. Household Income below filing threshold or gross Income below filing threshold. This is the only exemption that applies to the entire household for the entire year.
2. Insurance is unaffordable (more than 8% of income); this applies when:
3. If you had a short coverage gap. If the coverage gap is 3 months or longer, it won’t qualify. If you had multiple gaps in one year, only the first one will qualify.
4. Certain noncitizens and citizens living abroad.
5. Members of a health care sharing ministry
6. Members of a Federally recognized Indian tribe or eligibility for services of Indian Health Service
7. Incarceration can also be claimed on the return, with the same conditions as the marketplace incarceration exemption.
8. Aggregate self-only coverage is unaffordable. This happens when individual coverage offers are affordable, but their combined cost is greater than 8% of income, and no family coverage is offered for less than 8% of income.
9. If you are a resident of a state that did not expand Medicaid (including Maine) and at any time during the last year and had income below 138% of the poverty line and would have been eligible if the state had expand Medicaid.
NOTE: These rules can change from year to year. Learn more about shared responsibility payment exemptions from the IRS.
Updated July, 2017