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Federal Form 8965 Instructions

Future Developments

For the latest information about developments related to Form 8965 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/form8965.

Purpose of Form

Beginning in 2014, individuals must have health care coverage, have a health coverage exemption, or make a shared responsibility payment with their tax return. Use Form 8965 to report a coverage exemption granted by the Marketplace (also called the "Exchange") or to claim a coverage exemption on your tax return. In addition, if for any month you or another member of your tax household had neither health care coverage nor a coverage exemption, these instructions provide the information you will need to calculate your shared responsibility payment.

Some coverage exemptions are available only from the Marketplace, others are available only by claiming them on your tax return, and others are available from either the Marketplace or by claiming them on your tax return. If you or another member of your tax household was granted a coverage exemption from the Marketplace, complete Part I of Form 8965. If you or another member of your tax household is claiming a coverage exemption on your tax return, complete Part II or Part III of Form 8965. Depending on your situation, you may need to complete one or more parts of the form.

These instructions also provide the information you will need to calculate your shared responsibility payment if, for any month, you or another member of your tax household did not have qualifying health care coverage (referred to as " minimum essential coverage ") or a coverage exemption. Use the Shared Responsibility Payment Worksheet, later, to figure your payment, if any. You will report any payment amount on your tax return (Form 1040, line 61; Form 1040A, line 38; or Form 1040EZ, line 11).

Who Must File

If you are required to file a tax return, you do not have minimum essential coverage for yourself and everyone else in your tax household, and you want to report or claim a coverage exemption for yourself or another member of your tax household, file Form 8965 to report or claim coverage exemptions. Attach Form 8965 to your tax return (Form 1040, Form 1040A, or Form 1040EZ).

If you are unable to check the box on your Form 1040 series return indicating that every member of your tax household had minimum essential coverage in every month of 2014 (and therefore you are filing Form 8965 to report or claim a coverage exemption or are making a shared responsibility payment), you do not need to take any action to indicate that some members of your tax household had minimum essential coverage for some or all months in 2014.

If you are not required to file a tax return, your tax household is exempt from the shared responsibility payment and you do not need to file a tax return to claim the coverage exemption. However, if you are not required to file a tax return but choose to file anyway, claim the coverage exemption on line 7a or 7b of Form 8965. (See the instructions under Part II, later.)

CAUTION. Only one Form 8965 should be filed for each tax household. If you can be claimed as a dependent by another taxpayer, you do not need to file Form 8965 and do not owe a shared responsibility payment.

CAUTION. Even if you do not need to report or claim a coverage exemption, you will need to use the Shared Responsibility Payment Worksheet included in these instructions to calculate the shared responsibility payment if you or another member of your tax household did not have minimum essential coverage or a coverage exemption for one or more months. Report any payment amount on your tax return but do not submit the Shared Responsibility Payment Worksheet to the IRS.

More Information

For more information on coverage exemptions, the shared responsibility payment, and other terms discussed in these instructions, including answers to Frequently Asked Questions and links to the final regulations issued by the Treasury Department and IRS, go to www.irs.gov/uac/Individual-Shared-Responsibility-Provision.

Types of Coverage Exemptions

The Types of Coverage Exemptions chart, later, shows the types of coverage exemptions available and whether the coverage exemption may be granted by the Marketplace, claimed on your tax return, or both. If you are claiming a coverage exemption in Part III, the right-hand column of the chart shows which code you should enter in column c to claim that particular coverage exemption.

TIP. If you did not apply for a coverage exemption from the Marketplace during 2014, claim the coverage exemption on your tax return, if allowed. If the coverage exemption can be granted only by the Marketplace (for example, a coverage exemption based on membership in certain religious sects or certain other exemptions sometimes referred to as hardship exemptions), apply to the Marketplace for that coverage exemption before filing your tax return. If the Marketplace has not processed your application before you file your tax return, complete Part I and enter "pending" in column c for each individual listed.

More Information

Definitions

Tax household. For purposes of Form 8965, your tax household generally includes you, your spouse (if filing a joint return), and any individual you claim as a dependent on your tax return. It also generally includes each individual you can, but do not, claim as a dependent on your tax return. To find out if you can claim someone as your dependent, see Exemptions for Dependents in Pub. 501, Exemptions, Standard Deduction, and Filing Information, or Line 6c - Dependents in the instructions for Form 1040 or Form 1040A.

However, an individual is included in your tax household in a month only if he or she is alive for the full month. Also, if you adopt a child during the year, the child is included in your tax household only for the full months that follow the month in which the adoption occurs.

Dependents of more than one taxpayer. Your tax household does not include someone you can, but do not, claim as a dependent if the dependent is properly claimed on another taxpayer's return or can be claimed by a taxpayer with higher priority under the tie-breaker rules described in Pub. 501.

Household income. For purposes of Form 8965, your household income is your modified adjusted gross income (MAGI) plus the MAGI of each individual in your tax household whom you claim as a dependent and who is required to file his or her own tax return. Use the Filing Requirements for Children and Other Dependents chart to determine whether your dependent is required to file his or her own tax return. You will need to calculate your household income to determine if you can claim the exemption for unaffordable coverage or the exemption for individuals with household income below the filing threshold, and also if you owe a shared responsibility payment. For information on how to figure MAGI for this purpose, see Modified adjusted gross income (MAGI), next.

Modified adjusted gross income (MAGI). For purposes of Form 8965, your MAGI is your adjusted gross income plus certain other items from your tax return.

If you file Form 1040. If you file Form 1040, figure your MAGI by adding the amounts reported on Form 1040, lines 8b and 37. If you claimed the foreign earned income exclusion, housing exclusion, or housing deduction, add the amount from Form 2555, lines 45 and 50, or Form 2555-EZ, line 18.

If you file Form 1040A. If you file Form 1040A, figure your MAGI by adding the amounts on Form 1040A, lines 8b and 21.

If you file Form 1040EZ. If you file Form 1040EZ, figure your MAGI by adding the amount on Form 1040EZ, line 4 and any tax-exempt interest reported in the space to the left of line 2.

Filing Requirements for Children and Other Dependents

This chart will help you determine whether your dependent is required to file his or her own tax return.

Single dependents. Was your dependent either age 65 or older or blind?

No. Your dependent must file a return if any of the following apply.

  • His or her unearned income was over $1,000.
  • His or her earned income was over $6,200.
  • His or her gross income was more than the larger of -
    • $1,000, or
    • His or her earned income (up to $5,850) plus $350.
     

Yes. Your dependent must file a return if any of the following apply.

  • His or her unearned income was over $2,550 ($4,100 if 65 or older and blind).
  • His or her earned income was over $7,750 ($9,300 if 65 or older and blind).
  • His or her gross income was more than the larger of -
    • $2,550 ($4,100 if 65 or older and blind), or
    • His or her earned income (up to $5,850) plus $1,900 ($3,450 if 65 or older and blind).
     

Married dependents. Was your dependent either age 65 or older or blind?

No.Your dependent must file a return if any of the following apply.

  • His or her unearned income was over $1,000.
  • His or her earned income was over $6,200.
  • His or her gross income was at least $5 and his or her spouse files a separate return and itemizes deductions.
  • His or her gross income was more than the larger of -
    • $1,000, or
    • His or her earned income (up to $5,850) plus $350.
     

Yes. Your dependent must file a return if any of the following apply.

  • His or her unearned income was over $2,200 ($3,400 if 65 or older and blind).
  • His or her earned income was over $7,400 ($8,600 if 65 or older and blind).
  • His or her gross income was at least $5 and his or her spouse files a separate return and itemizes deductions.
  • His or her gross income was more than the larger of -
    • $2,200 ($3,400 if 65 or older and blind), or
    • His or her earned income (up to $5,850) plus $1,550 ($2,750 if 65 or older and blind).
     

TIP. In this chart, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable social security benefits, pensions, annuities, and distributions of unearned income from a trust. Earned income includes salaries, wages, tips, professional fees, and taxable scholarship and fellowship grants. Gross income is the total of your unearned and earned income.

Marketplace. A Marketplace, or Health Insurance Marketplace (also referred to as an "Exchange"), is a governmental agency or nonprofit entity that makes qualified health plans available to individuals. The term "Marketplace" refers to state Marketplaces, regional Marketplaces, subsidiary Marketplaces, and the Federally-facilitated Marketplace.

Minimum essential coverage. Minimum essential coverage is health coverage that satisfies the individual shared responsibility provision. Minimum essential coverage generally includes coverage under a government-sponsored program, coverage from your employer, a plan that you buy in the individual market, and certain other coverage. The Types of Minimum Essential Coverage chart provides more information about the plans and arrangements that are minimum essential coverage.

Timing. You are considered to have minimum essential coverage for a month if you have it for at least 1 day during that month. For example, if you start a new job on June 26 and are covered under your employer's plan starting on that day, you are treated as having coverage for the entire month of June.

Foreign coverage. In general, coverage provided by a foreign employer to its employees and related individuals is minimum essential coverage. Individuals with such coverage should see Pub. 974, Premium Tax Credit (PTC). However, coverage purchased directly from a foreign health insurance issuer or provided by the government of a foreign country does not qualify as minimum essential coverage unless recognized as minimum essential coverage by the Department of Health and Human Services (HHS). To find out if HHS has recognized particular forms of foreign coverage as minimum essential coverage, go to www.irs.gov/uac/Individual-Shared-Responsibility-Provision.

Coverage for business owners. Minimum essential coverage includes coverage provided to a business owner (such as a partner or sole proprietor) under a plan that is eligible employer-sponsored coverage with respect to at least one employee.

Types of Minimum Essential Coverage

Employer-sponsored coverage:

  • Group health insurance coverage for employees under -
    • A governmental plan, such as the Federal Employees Health Benefit program
    • A plan or coverage offered in the small or large group market within a state
    • A grandfathered health plan offered in a group market
     
  • A self-insured health plan for employees
  • COBRA coverage
  • Retiree coverage

Individual health coverage:

  • Health insurance you purchase directly from an insurance company
  • Health insurance you purchase through the Marketplace
  • Health insurance provided through a student health plan
  • Health coverage provided through a student health plan that is self-funded by a university*

Coverage under government-sponsored programs:

  • Medicare Part A coverage
  • Medicare Advantage plans
  • Most Medicaid coverage**
  • Children's Health Insurance Program (CHIP)
  • Most types of TRICARE coverage**
  • Comprehensive health care programs offered by the Department of Veterans Affairs
  • State high-risk health insurance pools*
  • Health coverage provided to Peace Corps volunteers
  • Department of Defense Nonappropriated Fund Health Benefits Program
  • Refugee Medical Assistance

Other coverage:

  • Certain foreign coverage
  • Certain coverage for business owners

*This type of health coverage will not qualify as minimum essential coverage for plan years beginning after 2014 unless HHS recognizes it as minimum essential coverage under its own regulations.

**Medicaid and TRICARE programs that provide limited benefits generally do not qualify as minimum essential coverage; however, see Limited benefit Medicaid or TRICARE programs that are not minimum essential coverage, later.

Specific Instructions

Part I - Marketplace-Granted Coverage Exemptions for Individuals

If you or another member of your tax household has been granted one or more coverage exemptions from the Marketplace, or has an application for a coverage exemption pending with the Marketplace, complete Part I to report these exemptions. Complete a line for each individual who received or has a pending application for a Marketplace-granted coverage exemption. If an individual was granted or has a pending application for more than one coverage exemption from the Marketplace, complete a separate line for each coverage exemption for that individual. If your tax household was granted or has a pending application for more than six coverage exemptions from the Marketplace, attach a separate statement showing the information required in columns a through c for each additional coverage exemption.

Lines 1-6

Column a - Name of Individual

Enter the name of each person in your tax household who was granted a coverage exemption from the Marketplace or has an application for a coverage exemption pending with the Marketplace. If the individual is listed on page 1 of your tax return, enter the name exactly as it appears on your tax return.

Column b - Social Security Number (SSN)

Enter the SSN of the individual listed in column a. If the individual is listed on page 1 of your tax return, the SSN in this column should match the individual's SSN listed on your tax return.

Column c - Exemption Certificate Number (ECN)

Enter the ECN that you received from the Marketplace for the individual listed in column a. If you were granted a coverage exemption from the Marketplace, but did not receive an ECN, or do not know your ECN, contact the Marketplace to obtain your ECN. If the Marketplace has not processed your application before you file, enter "pending."

Members of certain religious sects (enter ECN). An individual may claim a coverage exemption for members of recognized religious sects only if the Marketplace has granted the individual an exemption. A recognized religious sect is a religious sect in existence since December 31, 1950, that is recognized by the Social Security Administration as conscientiously opposed to accepting any insurance benefits, including Medicare and social security.

TIP. In addition to the coverage exemption for members of recognized religious sects, certain other exemptions sometimes referred to as hardship exemptions also may be granted only by the Marketplace. See the Types of Coverage Exemptions chart, earlier.

TIP.Members of a health care sharing ministry, members of Federally-recognized Indian tribes, individuals eligible for services from an Indian health care provider, and incarcerated individuals may have been granted a coverage exemption from the Marketplace or may claim a coverage exemption on their tax return. If you received one of these coverage exemptions from the Marketplace, follow the instructions for Part I to report your exemption. If you did not receive a coverage exemption from the Marketplace and want to claim one of these exemptions on your tax return, see the instructions for Part III, later.

Part II - Coverage Exemptions for Your Household Claimed on Your Return

Use Part II to claim a coverage exemption on behalf of your tax household because your household income or your gross income is less than your filing threshold. See Filing Thresholds For Most People, earlier, to figure your filing threshold.

TIP. If you are not required to file a tax return and do not wish to file a return, your tax household is exempt from the shared responsibility payment and you do not need to file 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 tax return for any reason, see the instructions for lines 7a and 7b next.

Line 7a - Household Income Below Filing Threshold

You can claim a coverage exemption if your household income is less than your filing threshold. To claim this coverage exemption, you must first figure your household income (see Household income, under Definitions, earlier). Then compare your household income to the filing threshold that applies to you based on your filing status. If your household income is less than your filing threshold, check the box labeled "yes."

If you qualify for this coverage exemption, everyone in your tax household is exempt for the entire year.

Line 7b - Gross Income Below Filing Threshold

You can claim a coverage exemption if your gross income is less than your filing threshold. To claim this coverage exemption, you must first figure your gross income. Then compare your gross income to the filing threshold that applies to you based on your filing status. See Filing Thresholds For Most People, earlier. If your gross income is less than your filing threshold, check the box labeled "yes."

If you qualify for this coverage exemption, everyone in your tax household is exempt for the entire year.

Part III - Coverage Exemptions for Individuals Claimed on Your Return

Use Part III to claim a coverage exemption on your tax return for yourself or another member of your tax household. Complete a line for each individual for whom you are claiming a coverage exemption. If you are claiming more than one coverage exemption for any individual, you must generally complete a separate line for each coverage exemption. But if, for any individual, you are claiming two or more different types of coverage exemptions that have the same code listed in the Types of Coverage Exemptions chart, use a single line to claim those coverage exemptions. If you need more than six lines, attach an additional page showing the information required in columns a through p, as applicable, for each additional coverage exemption.

TIP. Coverage exemptions that may be granted for less than a full tax year apply in all months in which an individual was eligible for the coverage exemption for at least one day in that month. For example, if an individual is incarcerated following the disposition of charges from June 28 to July 28, the individual is eligible for the coverage exemption for June and July.

Lines 8-13

Column a - Name of Individual

Enter the name of each person in your tax household for whom you are claiming a coverage exemption. If the individual is listed on page 1 of your tax return, enter the name exactly as it appears on your tax return.

Column b - Social Security Number (SSN)

Enter the SSN of the individual listed in column a. If the individual is listed on page 1 of your tax return, the SSN in this column should match the individual's SSN listed on your tax return.

IRS Individual Taxpayer Identification Number (ITIN) for Aliens. If the individual listed in column a does not have and is not eligible to get an SSN, enter the ITIN assigned to that person by the IRS. If the individual was placed with you for legal adoption and you do not know his or her SSN, enter the adoption taxpayer identification number (ATIN) assigned to that individual by the IRS.

No identification number. If the individual listed in column a does not have an SSN, ITIN, ATIN, or other identification number from the IRS, leave column b blank for that individual.

Column c - Exemption Type

Use column c to identify the type of coverage exemption you are claiming for yourself or another member of your tax household. Enter the code for the appropriate coverage exemption listed below and in the Types of Coverage Exemptions chart, earlier.

Coverage considered unaffordable (code "A"). You can claim a coverage exemption for yourself or another member of your tax household for any month when the lowest cost coverage through an employer sponsored plan or, if the individual does not have access to employer sponsored coverage, coverage in the Marketplace is unaffordable for the individual. Coverage is unaffordable if the individual's required contribution (described below) is more than 8% of household income.

Use the Affordability Worksheet, later, to determine whether this coverage exemption applies to you or another member of your tax household for one or months of the year.

To claim this coverage exemption, enter code "A" in Part III, column c, and identify the months to which the exemption applies as described under Column d - p - Calendar Months, later.

Your required contribution depends on the type of coverage you are eligible to purchase. If you or another member of your tax household is eligible for coverage under an employer plan, see Determining an individual's required contribution - Individuals eligible for coverage under an employer plan, later. If you or another member of your tax household is not eligible for coverage under an employer plan, see Determining and individual's required contribution - Individuals not eligible for coverage under an employer plan, later. An individual is eligible for coverage under an employer plan for a month if the individual could have enrolled in the plan and had coverage for any day that month, even if the individual is eligible for another type of minimum essential coverage. Individuals eligible for coverage under an employer plan for a month do not need to determine whether other coverage would be affordable for that month.

Household income adjustment. For purposes of determining whether this coverage exemption applies, increase household income by the amount that the wages of you or your tax household were reduced to pay all or a portion of the premiums for employer-sponsored coverage (a salary reduction arrangement).

Determining an individual's required contribution - Individuals eligible for coverage under an employer plan. Employees eligible for self-only coverage from their employers. If you or another member of your tax household is an employee and is eligible for self-only coverage through his or her own employer, the employee's required contribution is the amount he or she would pay for the lowest cost self-only coverage in which he or she can enroll. For this purpose, the amount the employee would pay includes an amount that may be paid through a salary reduction arrangement.

Other family members eligible for employer coverage. If you or another member of your tax household is not eligible for coverage through his or her own employer (if any) but is eligible for family coverage under a plan offered by your employer or your spouse's employer if filing jointly (for example, a child who is eligible to enroll in family coverage offered by your employer), the individual's required contribution is the amount the employee would pay for the lowest cost family coverage that would cover everyone in the tax household:

  • for whom a personal exemption deduction is claimed on your tax return,
  • who is eligible for the coverage, and
  • who does not qualify for another coverage exemption.

For this purpose, the amount the employee would pay includes amounts that may be paid through a salary reduction arrangement.

Example 1 - unmarried employee with no dependents. Joyce is unmarried and has no dependents. Her household income is $60,000. During 2014, Joyce could purchase self-only coverage through her employer at a total cost to her of $5,000. As a result, Joyce can claim the exemption for unaffordable coverage because her required contribution ($5,000) is more than 8% of her household income ($4,800, which is $60,000 multiplied by .08).

Example 2 - married employee with dependents. Susan and Lee are married and file a joint return for 2014. They have two children, Elizabeth and Emilee, whom they claim as dependents on their return. During 2014, Susan could purchase self-only coverage under a plan offered by her employer at a cost to her of $4,000. Susan could also purchase family coverage under the plan, which would cover her, Lee, Elizabeth, and Emilee, at a cost to her of $12,000. Their household income for 2014 is $90,000.

Susan is ineligible for the exemption for unaffordable coverage for 2014 because her required contribution ($4,000) is not more than 8% of her household income ($7,200, which is $90,000 multiplied by .08). The required contribution for Lee, Elizabeth, and Emilee is Susan's share of the cost for family coverage ($12,000), which is more than 8% of their household income ($7,200). As a result, Lee, Elizabeth, and Emilee are eligible for the exemption for unaffordable coverage for 2014.

Employer-sponsored coverage for part of the year. If you or another member of your tax household becomes unemployed or changes employers during the year, test the affordability of coverage for that individual separately for each employment period. Similarly, if the required contribution for any employer plan changes during the year (generally because one plan year ends and another one starts during the year), test the affordability of the coverage separately for each period.

Coverage under an employer plan is considered unaffordable for a part-year period if the annualized premium for self-only coverage (in the case of an employee) or family coverage (in the case of a related individual) under the plan for the part-year period is more than 8% of your household income.

You can use the Annualized Premium Worksheet to figure the annualized premium.

TIP. If you or another member of your tax household was eligible for coverage under an employer plan with a plan year that started in 2013 and ended in 2014, see Non-calendar year employer plan beginning in 2013, later. You do not owe a shared responsibility payment for that individual for any month during that plan year (use code "H" to claim this coverage exemption). However, this exemption is not available for the months in 2014 that follow the last month included in the plan year that started in 2013 and ended in 2014.

Annualized Premium Worksheet

CAUTION. Complete a separate worksheet for each part-year period.

1. Enter the premiums paid during the part-year period _____
2. Enter the number of full months in the part-year period _____
3. Divide line 1 by line 2 _____
4. Multiply line 3 by 12.0. This is your annualized premium _____

Example 3 - plan year other than calendar year. Braden is unmarried and has no dependents. His household income is $60,000. Braden is eligible for coverage under his employer's plan, but the plan does not run on a calendar year. In June 2013, Braden could have purchased self-only coverage for the period from July 2013 through June 2014 at a total cost to him of $4,750. In June 2014, he could have purchased self-only coverage for the period from July 2014 through June 2015 at a total cost to him of $5,000. Braden can claim the coverage exemption for non-calendar year employer plans from 2013, explained later, for January 2014 through June 2014. Braden can claim the exemption for unaffordable coverage from July 2014 through December 2014 because his annualized required contribution for that period is $5,000 ($2,500 paid for premiums during the 6-month period divided by 6 and multiplied by 12), which is more than 8% of his household income ($4,800, which is $60,000 multiplied by .08).

Determining an individual's required contribution - Individuals not eligible for coverage under an employer plan. If you or another member of your tax household cannot purchase coverage under an employer plan, the individual's required contribution is based on the premium for the lowest cost bronze plan available through the Marketplace minus the maximum premium tax credit that you could have claimed if the individuals had enrolled in this plan. Use the Marketplace Coverage Affordability Worksheet to determine whether you or another member of your tax household is eligible for this coverage exemption.

For this purpose, use the lowest cost bronze plan available through the Marketplace that covers everyone in your tax household:

  • for whom a personal exemption deduction is claimed on your tax return,
  • who is not eligible for employer coverage, and
  • who does not qualify for another coverage exemption.

For information on the lowest cost bronze plan you could have purchased for your tax household, visit healthcare.gov or contact the Marketplace serving your area. Subtract from the premium the maximum premium tax credit that you could have claimed if these individuals had enrolled in that plan. You can claim the exemption for unaffordable coverage for the individual if the result is more than 8% of your household income.

If the Marketplace serving the area where the individual resides does not offer a single bronze plan that would cover everyone in your tax household who may be eligible for the exemption for unaffordable coverage, add the premiums for the lowest cost bronze plans that are offered through the Marketplace where one or more of the members of your tax household who may be eligible for this exemption reside that would together cover all of these individuals.

For information about the premium tax credit, see the instructions for Form 8962 and Pub. 974.

Example 4 - unmarried individual with no dependents and no employer coverage. Eastin is unmarried and has no dependents. His household income is $40,000. For each month in 2014, he is ineligible to enroll in employer coverage. The annual premium for the lowest cost bronze self-only plan in Eastin's rating area is $5,000 and the maximum premium tax credit that he could claim if he had enrolled in this coverage is $1,700. Eastin can claim the exemption for unaffordable coverage for 2014 because his required contribution is $3,300 ($5,000 minus $1,700), which is more than 8% of his household income ($3,200, which is $40,000 multiplied by .08).

Short coverage gap (code "B"). You generally can claim a coverage exemption for yourself or another member of your tax household for each month of a gap in coverage of less than 3 consecutive months. If an individual had more than one short coverage gap during the year, the individual is exempt only for the month(s) in the first gap. If an individual had a gap of 3 months or more, the individual is not exempt for any of those months. For example, if an individual had coverage for every month in the year except February and March, the individual is exempt for those 2 months. However, if an individual had coverage for every month in the year except February, March, and April, the individual is not exempt for any of those months.

Example - short coverage gap. Fred has minimum essential coverage except for the period April 5 through July 25. An individual is treated as having coverage for any month in which he or she has coverage for at least 1 day of the month. As a result, Fred has minimum essential coverage in April and July and is eligible for the short coverage gap exemption for May and June.

To claim this coverage exemption, enter code "B" in Part III, column c, and identify the months to which the exemption applies as described under Column d - p - Calendar Months, later.

Citizens living abroad and certain noncitizens (code "C"). You can claim a coverage exemption for yourself or another member of your tax household to which any of the following apply.

  • The individual is a U.S. citizen or resident who is physically present in a foreign country (or countries) for at least 330 full days within a 12-month period. You can claim the coverage exemption for any month during your tax year that is included in the 12-month period. For more information, see Physical Presence Test in Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.
  • The individual is a U.S. citizen who is a bona fide resident of a foreign country (or countries) for an entire tax year. You can claim the coverage exemption for the entire year. For more information, see Bona Fide Residence Test in Pub. 54.
  • The individual is a resident alien who is a citizen or national of a country with which the U.S. has an income tax treaty with an applicable nondiscrimination clause and who is a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. You can claim the coverage exemption for the entire year. For more information, see Bona Fide Residence Test in Pub. 54.
  • The individual is a bona fide resident of a U.S. territory. You can claim the coverage exemption for the entire year.
  • The individual is not a U.S. citizen, not a U.S. national, and not an individual lawfully present in the U.S. For more information about who is treated as lawfully present for purposes of this coverage exemption, visit healthcare.gov.
  • You file a Form 1040NR or Form 1040NR-EZ. Do not attach Form 8965 to your tax return.

To claim this coverage exemption, enter code "C" in Part III, column c, and identify the months to which the exemption applies as described under Column d - p - Calendar Months, later.

Members of a health care sharing ministry (code "D"). You can claim a coverage exemption for yourself or another member of your tax household for any month in which the individual was a member of a health care sharing ministry for at least 1 day in the month. Enter code "D" in Part III, column c, and identify the months to which the coverage exemption applies as described under Column d - p - Calendar Months, later.

In general, a health care sharing ministry is a tax-exempt organization whose members share a common set of ethical or religious beliefs and share medical expenses in accordance with those beliefs, even after a member develops a medical condition. The health care sharing ministry (or a predecessor) must have been in existence and sharing medical expenses continuously and without interruption since December 31, 1999. An individual who is unsure whether a ministry meets the requirements should contact the ministry for further information.

TIP. If you or another member of your tax household was a member of a health care sharing ministry and was granted a coverage exemption by the Marketplace, see the instructions for Part I, earlier, to claim the exemption.

Members of Indian tribes or individuals otherwise eligible for services from an Indian health care provider (code "E"). You can claim a coverage exemption for yourself or another member of your tax household for any month in which the individual was a member of a Federally-recognized Indian tribe, including an Alaska Native Claims Settlement Act (ANCSA) Corporation Shareholder (regional or village), for at least 1 day in the month. The list of Federally-recognized Indian tribes is available at www.bia.gov/WhoWeAre/BIA/OIS/TribalGovernmentServices/TribalDirectory. The list of village or regional corporations formed under ANCSA is available at dnr.alaska.gov/mlw/trails/17b/corpindex.cfm. You can also claim a coverage exemption for yourself or another member of your tax household for any month in which the individual was eligible for services through an Indian health care provider or through the Indian Health Service.

To claim either of these coverage exemptions, enter code "E" in Part III, column c, and identify the months to which the exemption applies as described under Column d - p - Calendar Months, later.

TIP. If you or another member of your tax household was a member of a Federally-recognized Indian tribe and was granted a coverage exemption by the Marketplace, see the instructions for Part I, earlier, to claim the exemption.

Incarceration (code "F"). You can claim a coverage exemption for yourself or another member of your tax household for any month in which the individual was incarcerated for at least 1 day in the month. For this purpose, an individual is considered incarcerated if he or she was confined, after the disposition of charges, in a jail, prison, or similar penal institution or correctional facility. To claim this coverage exemption, enter code "F" in Part III, column c, and identify the months to which the exemption applies as described under Column d - p - Calendar Months, later.

TIP. If you or another member of your tax household was incarcerated and was granted a coverage exemption by the Marketplace, see the instructions for Part I, earlier, to claim the exemption.

Aggregate self-only coverage considered unaffordable (code "G"). You and any other members of your tax household for whom you claim a personal exemption deduction can claim a coverage exemption for all months in 2014 if, for at least 1 month in 2014:

  1. The cost of each self-only coverage through employers for two or more members of your tax household does not exceed 8% of household income when tested individually, and
  2. The cost of family coverage that the members of your tax household described in condition 1 could enroll in through an employer exceeds 8% of household income, and
  3. The combined cost of the self-only coverage identified in condition 1 exceeds 8% of household income.

Example 1 - two offers of self-only coverage that together are unaffordable. Justin and Sally are married, have no dependents, and file a joint return. Justin is offered self-only coverage through his employer at a cost of 6% of the household income and is offered family coverage that would cover both Sally and him at a cost of 10% of the household income. Sally is offered self-only coverage through her employer at a cost of 5% of the household income but is not offered family coverage. Sally and Justin both may claim the coverage exemption for two or more members of a tax household whose combined cost of employer-sponsored coverage is considered unaffordable because the self-only coverage offered to Justin and Sally does not exceed 8% of the household income when tested individually, the cost of family coverage exceeds 8% of the household income, and the combined cost of the self-only coverage offered to Justin and Sally exceeds 8% of the household income.

Example 2 - affordable family coverage. The facts are the same as in Example 1 except Justin's employer offers family coverage that would cover both Sally and him at a cost of 7% of the household income. Neither Justin nor Sally may claim the coverage exemption for two or more members of a tax household whose combined cost of employer-sponsored coverage is considered unaffordable, because the family coverage offered by Justin's employer covers both Justin and Sally and its cost does not exceed 8% of the household income.

Example 3 - one spouse enrolls in coverage. The facts are the same as in Example 1 except Justin enrolls in the self-only coverage offered by his employer. Sally may claim the coverage exemption for two or more members of a tax household whose combined cost of employer-sponsored coverage is considered unaffordable.

To claim this coverage exemption, enter code "G" in Part III, column c, and check the box in column d.

Gap in coverage at the beginning of 2014 (code "G"). If you or another member of your tax household enrolled in coverage through the Marketplace and your coverage started on or before May 1, 2014, you can claim a coverage exemption for any month(s) prior to May 2014 that you (or another member of your tax household) did not have coverage.

In addition, if you or another member of your tax household enrolled in minimum essential coverage that started on or before May 1, 2014, from a source other than the Marketplace, you can claim a coverage exemption for that individual for any month(s) prior to May 2014 that you (or another member of your tax household) did not have coverage.

To claim this coverage exemption, enter code "G" in Part III, column c, and identify the months to which the exemption applies as described under Column d - p - Calendar Months, later. You can claim this exemption for any month prior to the effective date of the coverage.

TIP. If you purchased insurance from the Marketplace on or after December 24, 2013, your insurance may not have been effective for 1 or more months during 2014. You can claim a coverage exemption for those months.

Gap in CHIP coverage (code "G"). If you or another member of your tax household applied for CHIP during the initial open enrollment period and, based on that application, was found eligible for CHIP, you can claim a coverage exemption for that individual for any month before the effective date of the individual's coverage. For most taxpayers, the initial open enrollment period began on October 1, 2013, and ended on March 31, 2014.

To claim this coverage exemption, enter code "G" in Part III, column c, and identify the months to which the exemption applies as described under Column d - p - Calendar Months, later.

Resident of a state that did not expand Medicaid (code "G"). You can claim a coverage exemption for yourself or another member of your tax household for 2014 if:

  • Your household income is less than 138% of the federal poverty line for the number of individuals in your tax household, not including any dependents you did not claim; and
  • At any time in 2014 the individual resided in Alabama, Alaska, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Maine, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Hampshire, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wyoming, or Wisconsin.

For purposes of this exemption, your household income is increased by the amount of any social security benefits that you received that were not included in your gross income. To see if your household income is less than 138% of the federal poverty line for the number of individuals in your tax household, not including any dependents you did not claim, see the instructions for Form 8962, line 4.

To claim this coverage exemption, enter code "G" in Part III, column c, and check the box in column d.

TIP. Qualifying individuals can claim this exemption on their tax returns without visiting the Marketplace. However, if you applied to the Marketplace for the similar coverage exemption for individuals who resided in a state that did not expand Medicaid, see the instructions for Part I, earlier, to claim the exemption.

Limited benefit Medicaid or TRICARE programs that are not minimum essential coverage (code "H"). Government-sponsored programs that may provide only limited coverage generally do not qualify as minimum essential coverage; however, for 2014 only you can claim a coverage exemption with respect to an individual for any month during 2014 in which the individual is enrolled in one of the following programs:

  • Family planning services Medicaid;
  • Tuberculosis-related services Medicaid;
  • Pregnancy-related Medicaid;
  • Medicaid coverage only for emergency medical service;
  • Coverage authorized under section 1115 of the Social Security Act;
  • Medicaid for the medically needy, also known as Spend-down Medicaid or Share-of-cost Medicaid;
  • Limited-benefit TRICARE coverage of space-available care; or
  • Limited-benefit TRICARE coverage of line-of-duty care.

To claim this coverage exemption, enter code "H" in Part III, column c, and identify the months to which the exemption applies as described under Column d - p - Calendar Months, later.

TIP. You should check www.irs.gov/uac/Individual-Shared-Responsibility-Provision for future updates about whether any of these programs are recognized as minimum essential coverage after 2014.

Non-calendar year employer plan beginning in 2013 (code "H"). If you or another member of your tax household was eligible for coverage under an employer plan with a plan year that started in 2013 and ended in 2014, you can claim a coverage exemption for that individual for any month during that plan year.

To claim this coverage exemption, enter code "H" in Part III, column c, and identify the months to which the exemption applies as described under Column d - p - Calendar Months next.

Columns d - p - Calendar Months

For each coverage exemption claimed in column a, check the appropriate box or boxes for the months for which the particular exemption applies. If the coverage exemption applies for the full year, check the box in column d and do not check the boxes in columns e - p.