Topic Number 561 - Individual Shared Responsibility Provision
The individual shared responsibility provision requires that, for each month during the year, you and all members of your family:
- Have minimum essential coverage (MEC);
- Qualify for an exemption; or
- Make a shared responsibility payment when you file your 2018 federal income tax return in 2019.
You'll report MEC, claim exemptions, or make any individual shared responsibility payment when you file your federal income tax return. You're responsible for reporting these items for yourself and any individuals whom you may claim as dependents for federal tax purposes.
MEC includes many types of health benefits coverage, including:
- Government-sponsored programs such as Medicare, most coverage under Medicaid, the Children's Health Insurance Program, TRICARE, and most health coverage provided to veterans;
- Most employer-sponsored coverage, including coverage under a self-insured group health plan;
- Health insurance coverage in the individual market, including a health plan enrolled in through the Health Insurance Marketplace; and
- Certain other types of coverage recognized as MEC for purposes of the individual shared responsibility provision.
Coverage for one day in a month under any program that's MEC satisfies the requirement to have MEC for that month. Many people already have qualifying health coverage and don't need to do anything more than maintain that coverage in 2018 and report it on their tax returns filed in 2019. If you and all your dependents have full-year coverage, check the full-year coverage box on your tax return. Otherwise, see Form 8965.pdf, Health Coverage Exemptions and the Form 8965 Instructions, Health Coverage Exemptions (and instructions for figuring your shared responsibility payment).
There are several exemptions that may be available to you or a member of your family. See the Form 8965 Instructions for a complete list. Some exemptions from the individual shared responsibility provision include exemptions for:
- Members of a recognized religious sect;
- Members of a health care sharing ministry;
- Incarcerated individuals;
- Certain noncitizens and citizens living abroad;
- Individuals who don't have access to affordable MEC. In general, you don't have access to affordable MEC if the amount you must pay for MEC is more than 8.05 percent of your household income for 2018;
- Individuals whose household income or gross income is less than the minimum threshold for filing a tax return;
- Members of Federally-recognized Indian tribes, or individuals who are eligible for services through an Indian health care provider or the Indian Health Service;
- Individuals who have a gap in coverage that's less than 3 full calendar months;
- Individuals who've experienced a hardship that prevents coverage under MEC. There are several specific circumstances that have been identified as a hardship for this purpose.
Some exemptions are exclusively granted by the Marketplace, some are claimed only on tax returns, and some may be obtained from the Marketplace or claimed on tax returns. Whether you must first apply for an exemption from the Marketplace or may wait to claim the exemption when you file your income tax return depends on the type of exemption for which you're eligible.
- The exemption for members of recognized religious sects and most hardship exemptions are available only by applying for an exemption certificate at the Health Insurance Marketplace. If granted, the Marketplace will issue you an Exemption Certificate Number (ECN) that you'll report on Form 8965.pdf filed with your federal income tax return.
- The exemptions for certain noncitizens and citizens living abroad, incarcerated individuals, a lack of affordable MEC, having income below your income tax return filing threshold, and a short coverage gap can only be claimed on your tax return. Individuals whose gross income is below their income tax return filing threshold don't have to file a return solely to claim an exemption. However, if such an individual files a tax return anyway (for example, to claim a refund), the individual should claim an exemption on Form 8965.
In general, all exemptions must be reported to the IRS on Form 8965. Use Form 8965 to report an exemption, the names, and taxpayer identification numbers of each individual in your family claiming the exemption, and the months during the year for which you're claiming the exemption. Attach this form to your Form 1040.pdf, U.S. Individual Income Tax Return.
Making an Individual Shared Responsibility Payment
The amount of the individual shared responsibility payment is based on the number of months that you don't have coverage or an exemption.
For 2018, the individual shared responsibility payment for each month is the greater of one twelfth of:
- 2.5 percent of your household income that's above your income tax return filing threshold; or
- Your family's flat dollar amount, which is $695 per adult and $347.50 per child under age 18 for each member of your family who isn't covered by MEC or doesn't qualify for an exemption, limited to a family maximum of $2,085.
The amount you pay can't be more than the sum of the monthly national average premiums for a bronze level health plan available through the Marketplace in 2018 that would cover all members of your family for whom a payment is owed. In 2018, the monthly national average premium for a bronze level health plan available through the Marketplace is $283 per individual, up a family maximum of $1,415 per month for shared responsibility families of five or more members. For more information, see Revenue Procedure 2018-43.
If you're required to make an individual shared responsibility payment for tax year 2018, report the amount on line 61 of Form 1040, Schedule 4.pdf, Other Taxes and attach to Form 1040. For more information, see Am I Eligible for a Coverage Exemption or Required to Make an Individual Shared Responsibility Payment?
For more information about these and other tax provisions included in the Affordable Care Act, see our Affordable Care Act (ACA) Tax Provisions page. Additional information about exemptions is available on the Individual Shared Responsibility Provision page. This includes a chart, IRS You Tube video – Individual Shared Responsibilities - Overview, and Questions and Answers.
Reminder from the IRS: Taxpayers who need health coverage should visit HealthCare.gov to learn about health insurance options that are available for them and their family, how to purchase health insurance, and how they might qualify to get financial assistance with the cost of insurance.