Instructions For Form 8965 - Health Coverage Exemptions

isn't eligible for coverage under an employer plan, see

Determin-

Example 2—Married employee with dependents. Susan

ing an individual's required contribution—Individuals not eligible

and Lee are married and file a joint return for 2017. They have

for coverage under an employer

plan, later.

two children, Elizabeth and Emilee, whom they claim as depend-

ents on their return. During 2017, Susan could purchase self-on-

Eligibility for employer-sponsored coverage. An individ-

ly coverage under a plan offered by her employer at a cost to her

ual is treated as eligible for coverage under an employer plan for

of $4,000. Alternatively, Susan could purchase family coverage

a month if the individual could have been covered by that plan

under the plan, which would cover her, Lee, Elizabeth, and Emi-

for any day that month, even if the individual also is eligible for

lee, at a cost to her of $12,000. Lee could not purchase health

another type of minimum essential coverage. Individuals eligible

insurance through his employer. Their household income for

for coverage under an employer plan for a month don't need to

2017 is $90,000.

determine whether other coverage is considered affordable for

Susan is ineligible for the exemption for unaffordable cover-

that month.

age for 2017 because her required contribution ($4,000) isn’t

Household income adjustment. For purposes of determin-

more than 8.16% of her household income ($7,344, which is

ing whether this coverage exemption applies, increase house-

$90,000 multiplied by 0.0816). If Susan doesn’t qualify for anoth-

hold income by any amount that your wages or the wages of any

er coverage exemption, she would make a shared responsibility

other member of your tax household whose MAGI was included

payment for the months during which she didn’t have coverage.

in your household income were reduced to pay all or a portion of

The required contribution for Lee, Elizabeth, and Emilee is

the premiums for employer-sponsored coverage through a sal-

Susan's share of the cost for family coverage ($12,000), which is

ary reduction arrangement.

more than 8.16% of their household income ($7,344). As a re-

sult, Lee, Elizabeth, and Emilee are eligible for the exemption for

Determining an individual's required contribution—

unaffordable coverage for 2017. Susan and Lee don’t need to

Individuals eligible for coverage under an employer plan.

make a shared responsibility payment on behalf of Lee, Eliza-

Employees eligible for self-only coverage from their em-

beth, and Emilee for any months during which the three of them

ployers. If you or another member of your tax household is an

didn’t have coverage.

employee and is eligible for self-only coverage through his or her

own employer, the employee's required contribution is the

Employer-sponsored coverage for part of the year. If

amount he or she would pay for the lowest cost self-only cover-

you or another member of your tax household becomes unem-

age in which he or she can enroll. For this purpose, the amount

ployed or changes employers during the year, test the affordabil-

the employee would pay includes an amount that may be paid

ity of coverage for that individual separately for each employ-

through a salary reduction arrangement. Also see

Certain em-

ment period. Similarly, if the required contribution for any em-

ployer arrangements

for information about how the required con-

ployer plan changes during the year (such as when one plan

tribution may be affected by various arrangements offered by an

year ends and another one starts during the year), test the af-

employer.

fordability of the coverage separately for each period.

Other family members eligible for employer coverage. If

Coverage under an employer plan is considered unaffordable

you or another member of your tax household isn't eligible for

for a part-year period if the annualized required contribution for

coverage through his or her own employer (if any) but is eligible

self-only coverage (in the case of an employee) or family cover-

for family coverage under a plan offered by your employer or

age (in the case of a related individual) under the plan for the

your spouse's employer if filing jointly (for example, a child who

part-year period is more than 8.16% of your household income.

is eligible to enroll in family coverage offered by your employer),

You can use the Annualized Required Contribution Work-

the individual's required contribution is the amount the employee

sheet to figure the annualized required contribution.

would pay for the lowest cost family coverage that would cover

Annualized Required Contribution Worksheet*

everyone in the tax household:

For whom a personal exemption deduction is claimed on

your tax return,

Complete a separate worksheet for each part-year period.

Who is eligible for the coverage, and

CAUTION

Who doesn't qualify for another coverage exemption.

1. Enter the required contribution for the part-year period

For this purpose, the amount the employee would pay includes

amounts that may be paid through a salary reduction arrange-

2. Enter the number of full months in the part-year period

ment. Also see

Certain employer arrangements

for information

3. Divide line 1 by line 2

about how the required contribution may be affected by various

4. Multiply line 3 by 12.0. This is your annualized required

arrangements offered by an employer.

contribution

Example 1—Unmarried employee with no dependents.

*The required contribution for employer-sponsored coverage may be

Joyce is unmarried and has no dependents. Her household in-

affected by various arrangements offered by your employer and may affect

come is $60,000. During 2017, Joyce could purchase self-only

the required contribution amount you enter into the Annualized Required

coverage through her employer at a total cost to her of $5,000.

Contribution Worksheet. For more information, see Certain employer

As a result, Joyce can claim the exemption for unaffordable cov-

arrangements.

erage because her required contribution ($5,000) is more than

8.16% of her household income ($4,896, which is $60,000 multi-

plied by 0.0816).

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Instructions For Form 8965 - Health Coverage Exemptions - 2016 Page 8

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