Instructions For Form 8965 - Health Coverage Exemptions

Column (c)—Exemption Certificate Number (ECN)

exemptions.

Enter the ECN that you received from the Marketplace for the in-

dividual listed in column (a). If you were granted a coverage ex-

Part II—Coverage Exemptions Claimed on Your

emption from the Marketplace, but didn't receive an ECN, or

Return for Your Household

don't know your ECN, contact the Marketplace to obtain your

ECN. If the Marketplace hasn't processed your application by

Use Part II to claim a coverage exemption on behalf of your tax

the time you file, enter “pending.”

household because your household income or your gross in-

come is less than your filing threshold. See

Filing Thresholds for

If you enter “pending” and the Marketplace ultimately denies

Most

People, later, to figure your filing threshold.

your coverage exemption (and you didn’t report or claim another

coverage exemption with your original return), the IRS may con-

If you aren't required to file a tax return because your

tact you to collect your shared responsibility payment, or you

gross income is less than your filing threshold, and you

TIP

may choose to file an amended tax return (Form 1040X) to make

don't wish to file a return, your tax household is exempt

your shared responsibility payment or claim another exemption

from the shared responsibility payment and you don't need to file

for which you are eligible.

a return or do anything else to claim the coverage exemption. If

your gross income is less than your filing threshold but you file a

The Marketplace exemption approval notice that you

tax return for any reason, see the instructions for line 7 next.

received also indicates the months for which the cover-

TIP

age exemption is granted. Don’t enter that information

Line 7—Household Income or Gross Income

in Part I. You will use that information to determine your shared

Below Filing Threshold

responsibility payment, if any. See

Shared Responsibility Pay-

ment, later.

You can claim a coverage exemption if your household income

or gross income is less than your filing threshold.

Members of certain religious sects (enter ECN). An individ-

ual may claim a coverage exemption for members of recognized

Household Income

religious sects only if the Marketplace has granted the individual

an exemption. A recognized religious sect is a religious sect in

To claim this coverage exemption based on your household in-

existence since December 31, 1950, that is recognized by the

come, you must first figure your household income (see

House-

Social Security Administration as conscientiously opposed to ac-

hold

income, under Definitions, earlier). Then compare your

cepting any insurance benefits, including Medicare and social

household income to the filing threshold that applies to you

security.

based on your filing status. If your household income is less than

your filing threshold, check the box on line 7.

Duration. If a member of your tax household was granted a

coverage exemption as a member of a religious sect, you must

If you qualify for this coverage exemption, everyone in your

report it on Form 8965 every year it applies. Once the Market-

tax household is exempt for the entire year. You don't need to

place grants an individual this exemption, it generally applies

complete Part III.

each year unless the individual reports to the Marketplace that

Example 1. Lizzie and Fitz are both under age 65. They are

he or she no longer qualifies for the coverage exemption. How-

married and have three children, all of whom they claim as de-

ever, for an individual granted the exemption before his or her

pendents on their tax return. Lizzie and Fitz file Form 1040 as

21st birthday, the exemption applies only until the first full month

married filing jointly, report $16,000 of wages, and claim the

following the individual’s 21st birthday. After that, the individual

earned income credit. One of their children, Charlie, received

must apply to the Marketplace again for the exemption.

taxable interest of $1,100. Their other two children have no in-

Members of Indian tribes. The coverage exemption for mem-

come. Lizzie and Fitz were uninsured all year and don’t qualify

bers of Indian tribes and individuals eligible for services from an

for any other coverage exemption.

Indian health care provider is no longer granted by the Market-

To see if they qualify to claim the coverage exemption on

place, except in Connecticut. However, if the Marketplace (in-

line 7 of Form 8965, they first calculate their household income.

cluding the Connecticut Marketplace) granted a lifetime cover-

On their Form 1040, they have no amount on line 8b and

age exemption to you or a member of your tax household in

$16,000 on line 37, so their MAGI is $16,000. They look at the

2014, 2015, or 2016, and that individual’s status hasn’t changed,

Filing Requirements for Children and Other Dependents

chart

you may report the ECN on Part I of Form 8965. If the Connecti-

and see that since Charlie has $1,100 in unearned income, he is

cut Marketplace granted this coverage exemption to you or a

required to file his own tax return. On Charlie’s Form 1040EZ, he

member of your tax household for one or more months in 2017,

has no entry beside line 1b and $1,100 on line 4, so his MAGI is

you may report the ECN on Part I of Form 8965. An ECN for this

$1,100. Their household income is $17,100 ($1,100 of Charlie’s

exemption generally applies until the individual is no longer a

MAGI plus Lizzie and Fitz’s $16,000). They look at the

Filing

member of an Indian tribe or is no longer eligible for services

Thresholds for Most People

chart and see that their household

from an Indian health care provider. If you or a member of your

income ($17,100) is less than their filing threshold ($20,800).

tax household qualify for this exemption but don’t have an ECN,

Because Lizzie and Fitz are claiming the earned income credit,

you may claim the exemption on Part III of Form 8965.

they are going to file a tax return to claim the credit, even though

Other Marketplace coverage exemptions. Certain coverage

they are below the filing threshold. Lizzie and Fitz complete

exemptions are only granted by the Marketplace, for example

Form 8965, checking the box on line 7 and leaving Part III blank.

the general hardship coverage exemption. For examples of

Example 2. The facts are the same as in Example 1 except

hardships that qualify for the general hardship exemption, see

that Charlie doesn’t file his own tax return. Instead Lizzie and

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Instructions For Form 8965 - Health Coverage Exemptions - 2016 Page 6

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