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General Instructions

Purpose of Form

The individual shared responsibility provision requires each individual to 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, use these instructions to figure your shared responsibility payment if for any month you or another member of your tax household (defined later) had neither health care coverage nor a coverage exemption.

Reminder: If you need health coverage, visit www.HealthCare.gov to learn about health insurance options that are available for you and your family, how to purchase health insurance, and how you might qualify to get financial assistance with the cost of insurance.

Coverage exemptions.   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.

Shared responsibility payment.   You must make a shared responsibility payment if, for any month, you or another member of your tax household didn't have health care coverage (referred to as “ minimum essential coverage ”) or a coverage exemption. See Shared Responsibility Payment, later, to figure your payment, if any. Report your shared responsibility payment on your tax return (Form 1040, line 61; Form 1040A, line 38; or Form 1040EZ, line 11).

Who Must File

File Form 8965 to report or claim a coverage exemption if all of the following apply:

  • You are filing a Form 1040, 1040A, or 1040EZ (even if you are filing it because you are a dual-status alien for your first year of U.S. residency or a nonresident or dual-status alien who elected to file a joint return with a U.S. spouse),

  • You can't be claimed as a dependent by another taxpayer,

  • For one or more months of 2016, you or someone else in your tax household didn't have minimum essential coverage, and

  • You want to report or claim a coverage exemption for yourself or another member of your tax household.

Attach Form 8965 to your tax return (Form 1040, Form 1040A, or Form 1040EZ).

Form 8965 is used only to claim and report coverage exemptions. If you are unable to check the Full-year coverage box on your tax return, you do not need to report the months when you and other members of your tax household had minimum essential coverage.

Not required to file a tax return.   If you aren't required to file a tax return, your tax household is exempt from the shared responsibility payment and you don't need to file a tax return to claim the coverage exemption. However, if you aren't required to file a tax return but choose to file anyway, you must claim the coverage exemption on line 7 of Form 8965. (See the instructions under Part II, later.)

Form 1040NR and Form 1040NR-EZ filers.   If you file a Form 1040NR or Form 1040NR-EZ (including a dual-status tax return for your last year of U.S. residency) or someone claims a personal exemption deduction for you on a Form 1040NR or Form 1040NR-EZ, you are exempt from the shared responsibility payment. Don't attach Form 8965 to your Form 1040NR or Form 1040NR-EZ.

  For more information see chapters 1 and 6 of Pub. 519.

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

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 IRS.gov/srp.

Types of Coverage Exemptions

The Types of Coverage Exemptions chart 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. 

If you are eligible for a coverage exemption for 2016 that can be claimed on the tax return, claim it in Part II or Part III even if it can be granted by the Marketplace.

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 hardship exemptions), apply to the Marketplace for that coverage exemption before filing your tax return. If the Marketplace hasn't processed your application before you file your tax return, complete Part I and enter “pending” in column (c) for each individual listed.

Types of Coverage Exemptions

This chart shows all of the coverage exemptions available for 2016, including information about where each can be obtained and the code that is to be used on Form 8965 when you claim the exemption. If your coverage exemption was granted by the Marketplace, you will need to enter the Exemption Certificate Number (ECN) provided by the Marketplace (see the instructions for Part I). For additional detail about the eligibility rules for the coverage exemptions that are claimed on the tax return, see the instructions for lines 8–13, column (c), later.

Coverage Exemption Granted by Marketplace Claimed on Tax Return Code for Exemption
Income below the filing threshold—Your gross income or your household income was less than your applicable minimum threshold for filing a tax return.   No Code 
See Part II
Coverage considered unaffordable—The required contribution is more than 8.13% of your household income.   A
Short coverage gap—You went without coverage for less than 3 consecutive months during the year.   B
Citizens living abroad and certain noncitizens—You were:
  • A U.S. citizen or a resident alien who was physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months;

  • A U.S. citizen who was a bona fide resident of a foreign country or countries for an uninterrupted period that includes the entire tax year;

  • A bona fide resident of a U.S. territory;

  • A resident alien who was a citizen or national of a foreign country with which the U.S. has an income tax treaty with a nondiscrimination clause, and you were a bona fide resident of a foreign country for an uninterrupted period that includes the entire tax year;

  • Not lawfully present in the U.S and not a U.S. citizen or U.S. national. For more information about who is treated as lawfully present in the U.S. for purposes of this coverage exemption, visit www.HealthCare.gov; or

  • A nonresident alien, including (1) a dual-status alien in the first year of U.S. residency and (2) a nonresident alien or dual-status alien who elects to file a joint return with a U.S. spouse. This exemption doesn't apply if you are a nonresident alien for 2016, but met certain presence requirements and elected to be treated as a resident alien. For more information, see Pub. 519.

  C
Members of a health care sharing ministry—You were a member of a health care sharing ministry. * D
Members of Indian tribes—You were either a member of a Federally-recognized Indian tribe, including an Alaska Native Claims Settlement Act (ANCSA) Corporation Shareholder (regional or village), or you were otherwise eligible for services through an Indian health care provider or the Indian Health Service. * E
Incarceration—You were in a jail, prison, or similar penal institution or correctional facility after the disposition of charges. * F
Aggregate self-only coverage considered unaffordable—Two or more family members' aggregate cost of self-only employer-sponsored coverage was more than 8.13% of household income, as was the cost of any available employer-sponsored coverage for the entire family.   G
Resident of a state that did not expand Medicaid—Your household income was below 138% of the federal poverty line for your family size and at any time in 2016 you resided in a state that didn't participate in the Medicaid expansion under the Affordable Care Act.   G
Eligible for health coverage tax credit (HCTC)—You were eligible for the health coverage tax credit in the month. (For this purpose, you are considered eligible for the HCTC if you would have been eligible had you enrolled in HCTC-qualifying coverage.) This exemption is available only for July through December of 2016.   G
Member of tax household born or adopted during the year—The months before and including the month that an individual was added to your tax household by birth or adoption. You should claim this exemption only if you are also claiming another exemption on your Form 8965.   H
Member of tax household died during the year—The months after the month that a member of your tax household died during the year. You should claim this exemption only if you are also claiming another exemption on your Form 8965.   H
Members of certain religious sects—The Marketplace determined that you are a member of a recognized religious sect.   Need ECN 
See Part I
Ineligible for Medicaid based on a state’s decision not to expand Medicaid coverage—The Marketplace found that you would have been determined ineligible for Medicaid solely because the state in which you resided didn't participate in Medicaid expansion under the Affordable Care Act.   Need ECN 
See Part I
General hardship—The Marketplace determined that you experienced a hardship that prevented you from obtaining coverage under a qualified health plan.   Need ECN 
See Part I
Coverage considered unaffordable based on projected income—The Marketplace determined that you didn't have access to coverage that is considered affordable based on your projected household income.   Need ECN 
See Part I
Unable to renew existing coverage—The Marketplace determined that you were notified that your health insurance policy was not renewable and you considered the other plans available to be unaffordable.   Need ECN 
See Part I
Certain Medicaid programs that are not minimum essential coverage—The Marketplace determined that you were (1) enrolled in Medicaid coverage provided to a pregnant woman that is not recognized as minimum essential coverage; (2) enrolled in Medicaid coverage provided to a medically needy individual (also known as Spend-down Medicaid or Share-of-Cost Medicaid) that is not recognized as minimum essential coverage; or (3) enrolled in Medicaid coverage provided to a medically needy individual and were without coverage for other months because the spend-down had not been met.   Need ECN 
See Part I
*As of September 1, 2016, the coverage exemptions for members of health care sharing ministries, members of Indian tribes, and those who are incarcerated are no longer granted by the Marketplace, except in Connecticut. Taxpayers who have an ECN issued by the Marketplace for one or more of these three exemptions may report the ECN on a Form 8965 filed with their income tax return for 2016. Taxpayers who qualify for one or more of these exemptions but who do not have an ECN issued by the Marketplace may claim these exemptions on Part III of Form 8965.

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 don't, claim as a dependent on your tax return. (But see Dependents of more than one taxpayer, later.) 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.

Birth, death, or adoption.

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. If each individual who is a member of your tax household for any month had coverage for all the months they were members of your tax household, you will check the Full-year coverage box on your return. For information on how to identify months during which an individual was not a member of your tax household for one of these reasons, see Member of tax household born or adopted during the year and Member of tax household died during the year in Part III, later. You should file Form 8965 to identify these months only if you are otherwise filing Form 8965 to claim a coverage exemption.

Dependents of more than one taxpayer.

Your tax household doesn't include someone you can, but don't, 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.   You will need to calculate your household income if any of the following apply:
  • You wish to claim the coverage exemption for individuals with household income below the filing threshold,

  • You wish to claim the exemption for coverage that is considered unaffordable, or

  • You need to figure your shared responsibility payment.

  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 if that individual is required to file a tax return because his or her income meets the income tax return filing threshold. 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.

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.

  
Your MAGI for purposes of the individual shared responsibility provision may be different than the MAGI that applies for other tax purposes, including the premium tax credit.

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 amounts from Form 2555, lines 45 and 50, or Form 2555-EZ, line 18. If your dependent has a filing requirement, but you elect to report the dependent's income on Form 8814, include the dependent's MAGI in the household income by adding Form 8814, line 1b and the smaller of Form 8814, line 4 or 5.

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.

  
You can use Step 3 under Shared Responsibility Payment, later, to figure your household income.

Filing Requirements for Children and Other Dependents

Use this chart to help you determine if a dependent you claimed on your return must file his or her own tax return. If the dependent is required to file a tax return because his or her income meets the filing threshold, the dependent's MAGI must be included in household income for purposes of Form 8965, even if you elect to report that dependent's income on Form 8814. Do not include a dependent's MAGI in household income if the dependent's income is below the filing threshold, even if he or she chooses to file a return for another reason.

In this chart, unearned income includes taxable interest, ordinary dividends, capital gain distributions, 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.
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 $1,050.

  • His or her earned income was over $6,300.

  • His or her gross income was more than the larger of—

     
  • $1,050, or

  • His or her earned income (up to $5,950) plus $350.

 
Yes. Your dependent must file a return if any of the following apply.
   
  • His or her unearned income was over $2,600 ($4,150 if 65 or older and blind).

  • His or her earned income was over $7,850 ($9,400 if 65 or older and blind).

  • His or her gross income was more than the larger of—

     
  • $2,600 ($4,150 if 65 or older and blind), or

  • His or her earned income (up to $5,950) 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 $1,050.

  • His or her earned income was over $6,300.

  • 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—

     
  • $1,050, or

  • His or her earned income (up to $5,950) plus $350.

 
Yes. Your dependent must file a return if any of the following apply.
   
  • His or her unearned income was over $2,300 ($3,550 if 65 or older and blind).

  • His or her earned income was over $7,550 ($8,800 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—

     
  • $2,300 ($3,550 if 65 or older and blind), or

  • His or her earned income (up to $5,950) plus $1,600 ($2,850 if 65 or older and blind).

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 and grants certain coverage exemptions. 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 requirement for individuals to have health coverage. Minimum essential coverage generally includes coverage under a government-sponsored program, coverage from your employer, and coverage under certain plans that you buy in the individual market. If you, or a member of your family, had minimum essential coverage in 2016, the entity that provided the coverage is required to send you, by January 31, 2017, a Form 1095-A, 1095-B, or 1095-C, that lists individuals in your family who were enrolled in minimum essential coverage and shows their months of coverage. Individuals enrolled in a qualified health plan through the Marketplace generally receive this information on Form 1095-A, Health Insurance Marketplace Statement. Individuals enrolled in health insurance coverage outside the Marketplace, in a government-sponsored program, or in certain other coverage generally receive this information on Form 1095-B, Health Coverage. Individuals enrolled in employer-sponsored coverage generally receive this information on either Form 1095-B or on Part III of Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. For more information on these forms, see the instructions for Form 1040, line 61; Form 1040A, line 38; or Form 1040EZ, line 11. 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) for more information on which coverage provided by a foreign employer is minimum essential coverage. However, coverage that an individual purchases directly from a foreign health insurance issuer or that is provided by the government of a foreign country doesn't qualify as minimum essential coverage unless it is 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.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/minimum-essential-coverage.html, and scroll down and click on the link for the list of approved plans.

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

Minimum essential coverage means health care coverage under any of the following programs. It does not, however, include coverage consisting solely of excepted benefits. Excepted benefits include stand-alone vision and dental plans, workers' compensation coverage, and coverage limited to a specified disease or illness.

Employer-sponsored coverage:
 
  • Group health insurance coverage for employees under:

   
  • A plan or coverage offered in the small or large group market within a state,

  • A plan provided by a governmental employer, such as the Federal Employees Health Benefit program, or

  • A grandfathered health plan offered in a group market.

 
  • A self-insured health plan for employees,

  • COBRA coverage,

  • Retiree coverage, or

  • Coverage under an expatriate health plan for employees and related individuals.

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,

  • Catastrophic coverage, or

  • Coverage under an expatriate health plan for non-employees such as students and missionaries.

Coverage under government-sponsored programs:
 
  • Medicare Part A coverage,

  • Medicare Advantage plans,

  • Most Medicaid coverage,*

  • Children's Health Insurance Program (CHIP) coverage,

  • Most types of TRICARE coverage,

  • Comprehensive health care programs offered by the Department of Veterans Affairs,

  • Health coverage provided to Peace Corps volunteers,

  • Department of Defense Nonappropriated Fund Health Benefits Program,

  • Refugee Medical Assistance, or

  • Coverage through a Basic Health Program (BHP) standard health plan.

Other coverage:
 
  • Certain foreign coverage,

  • Certain coverage for business owners, or

  • Coverage recognized by HHS as minimum essential coverage.**

*Medicaid programs that provide limited benefits generally don't qualify as minimum essential coverage. However, individuals with certain types of limited-benefit Medicaid coverage qualify for a coverage exemption. See the Types of Coverage Exemptions chart.
**Plans recognized as minimum essential coverage are listed at: www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/minimum-essential-coverage.html, scroll down and click on the link for the list of approved plans.


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