skip navigation
Search Help
Navigation Help

Tax Map Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

International
Tax Topic Index

Affordable Care Act
Tax Topic Index

Exempt Organization
Tax Topic Index

FAQs
Forms
Publications
Tax Topics
Worksheets

Comments
About Tax Map

IRS.gov Website
Instructions for Form 8965
taxmap/instr/i8965-007.htm#en_us_publink10006664

Part III — Coverage Exemptions Claimed on Your Return for Individuals(p7)

rule
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.
taxtip
Coverage exemptions that may be granted for less than a full tax year apply to each month 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.
taxmap/instr/i8965-007.htm#en_us_publink10006665

Lines 8–13(p7)

rule
taxmap/instr/i8965-007.htm#en_us_publink10006666

Column (a)—Name of Individual(p7)

rule
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.
taxmap/instr/i8965-007.htm#en_us_publink10006667

Column (b)—Social Security Number (SSN)(p7)

rule
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.
taxmap/instr/i8965-007.htm#en_us_publink10006750
IRS Individual Taxpayer Identification Number (ITIN) for Aliens.(p7)
rule
If the individual listed in column (a) doesn't have and isn't eligible to get an SSN, enter the ITIN assigned to that person by the IRS.
taxmap/instr/i8965-007.htm#en_us_publink100032861
Adoption Taxpayer Identification Number (ATIN).(p7)
rule
If the individual was placed with you for legal adoption and you don't know his or her SSN, enter the ATIN assigned to that individual by the IRS.
taxmap/instr/i8965-007.htm#en_us_publink10006751
No identification number.(p7)
rule
If the individual listed in column (a) doesn't have an SSN, ITIN, ATIN, or other identification number from the IRS, leave column (b) blank for that individual.
taxmap/instr/i8965-007.htm#en_us_publink10006668

Column (c)—Exemption Type(p7)

rule
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.
taxmap/instr/i8965-007.htm#en_us_publink10006669
Coverage considered unaffordable (code A).(p7)
rule
You can claim a coverage exemption for yourself or another member of your tax household for any month in which:
Coverage is considered unaffordable if the individual's required contribution (described later) is more than 8.05% 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 Columns (d) - (p)—Calendar Months, later.
taxmap/instr/i8965-007.htm#en_us_publink100032551
Required contribution.(p8)
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 isn't eligible for coverage under an employer plan, see Determining an individual's required contribution—Individuals not eligible for coverage under an employer plan, later.
taxmap/instr/i8965-007.htm#en_us_publink100032552
Eligibility for employer-sponsored coverage.(p8)
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 don't need to determine whether other coverage would be affordable for that month.
taxmap/instr/i8965-007.htm#en_us_publink100031557
Household income adjustment.(p8)
For purposes of determining whether this coverage exemption applies, increase household income by any amount that your wages or the wages of any other member of your tax household whose MAGI was included in your household income were reduced to pay all or a portion of the premiums for employer-sponsored coverage (a salary reduction arrangement).
taxmap/instr/i8965-007.htm#en_us_publink10006672
Determining an individual's required contribution— Individuals eligible for coverage under an employer plan.(p8)
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 isn't 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 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.(p8)

Joyce is unmarried and has no dependents. Her household income is $60,000. During 2015, 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 8.05% of her household income ($4,830, which is $60,000 multiplied by 0.0805).

Example 2—married employee with dependents.(p8)

Susan and Lee are married and file a joint return for 2015. They have two children, Elizabeth and Emilee, whom they claim as dependents on their return. During 2015, 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. Lee could not purchase health insurance through his employer. Their household income for 2015 is $90,000.
Susan is ineligible for the exemption for unaffordable coverage for 2015 because her required contribution ($4,000) is not more than 8.05% of her household income ($7,245, which is $90,000 multiplied by 0.0805). If Susan does not qualify for another coverage exemption, she would make a shared responsibility payment for the months during which she did not have coverage.
The required contribution for Lee, Elizabeth, and Emilee is Susan's share of the cost for family coverage ($12,000), which is more than 8.05% of their household income ($7,245). As a result, Lee, Elizabeth, and Emilee are eligible for the exemption for unaffordable coverage for 2015. Susan and Lee do not need to make a shared responsibility payment for the months during which Lee, Elizabeth, and Emilee did not have coverage.
taxmap/instr/i8965-007.htm#en_us_publink10006673
Employer-sponsored coverage for part of the year.(p8)
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 (such as when 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 8.05% of your household income.
You can use the Annualized Premium Worksheet to figure the annualized premium.
taxmap/instr/i8965-007.htm#en_us_publink100014353

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
taxmap/instr/i8965-007.htm#en_us_publink100040708
Certain employer arrangements.(p9)
An employee's required contribution for employer-sponsored coverage may be affected by various arrangements offered by the employer. For example:
For more information on the effect that these arrangements have on an employee's required contribution for employer-sponsored coverage, see Notice 2015-87.
taxmap/instr/i8965-007.htm#en_us_publink10006674
Determining an individual's required contribution— Individuals not eligible for coverage under an employer plan.(p9)
If you or another member of your tax household can't 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.
For this purpose, use the lowest cost bronze plan available through the Marketplace that covers everyone in your tax household:
For information on the lowest cost bronze plan you could have purchased for your tax household, visit www.HealthCare.gov/tax-tool 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 8.05% of your household income.
If the Marketplace serving the area where the individual resides doesn't 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.
Use the Marketplace Coverage Affordability Worksheet to determine whether you or another member of your tax household is eligible for this coverage exemption.
taxmap/instr/i8965-007.htm#en_us_publink10009952

Affordability Worksheet

Use this worksheet to determine whether coverage for each individual in your tax household is unaffordable. If you or another member of your tax household isn't eligible for employer-sponsored coverage, use the Marketplace Coverage Affordability Worksheet to figure the required contribution for that individual. An individual is exempt for any month in which (B), the Required Contribution, is more than (A), the Affordability Threshold.

(A) Affordability Threshold
Enter 8.05% of your household income (see Household income). For this purpose, increase household income by the amount of any premium that is paid through a salary reduction arrangement and excluded from gross income.
        
(B) Required Contribution Amount
For each member of your tax household, enter in the columns provided the annual premium for the first option below that applies to that person. If the monthly premium is the same for the whole year, enter the annual premium in the space for each month. If the premiums cover only part of the year, use the Annualized Premium Worksheet to determine what the annualized premium would be for each month. Once you have figured the annualized premium, enter it in the space for each month.
        
 Options (use the first that applies to each member of your tax household, including you, for each month):
  1. The lowest cost self-only policy offered to each member of your tax household by his or her employer.
  2. The lowest cost family policy* offered by your employer or your spouse's employer (if you are filing a joint return).
  3. The amount from the Marketplace Coverage Affordability Worksheet.
 
  
        
For each individual, coverage is unaffordable and the individual is exempt for any month in which (B), the Required Contribution Amount, is more than (A), the Affordability Threshold.
Members of your tax household (enter one name per column):      
Annualized premium for:
January      
February      
March      
April      
May      
June      
July      
August      
September      
October      
November      
December      
*The policy must cover everyone in your tax household:
  • For whom a personal exemption deduction is claimed on your tax return,
  • Who isn't eligible for employer coverage, and
  • Who doesn't qualify for another coverage exemption.
taxmap/instr/i8965-007.htm#en_us_publink10009953

Marketplace Coverage Affordability Worksheet

Use this worksheet to figure an individual's required contribution for any month in which the individual isn't eligible for employer-sponsored coverage. Complete a separate worksheet for each part of the year in which either the individual resided in different geographic rating areas served by the Marketplace or for which the number of people in your tax household who are neither exempt nor eligible for minimum essential coverage (other than coverage in the individual market) was different.

caution Do not complete this worksheet unless you were instructed to do so in the Affordability Worksheet. 
1.Enter the monthly premium for the lowest cost bronze plan that covers everyone in your tax household for whom a personal exemption deduction is claimed, who isn't eligible for employer coverage, and who doesn't qualify for another coverage exemption for the month. To find the lowest cost bronze plan go to www.HealthCare.gov/tax-tool or the Marketplace for your area. If you are married and file a separate return, enter the monthly premium here and on line 12. Don't complete lines 2 through 11
2.Enter your household income (see Household income)
3.Enter the total of all nontaxable social security benefits received by you, your spouse, and each claimed dependent who must file a tax return*
4.Add lines 2 and 3
5.Enter the federal poverty line for the number of individuals in your tax household less any dependents not claimed. See the instructions for Form 8962, line 4
6.Divide line 4 by line 5. If the result (without rounding) is less than 1.0 or more than 4.0, skip lines 7 through 10 and enter -0- on line 11
7.Multiply line 6 by 100 and round down to the nearest whole number. Enter the applicable figure for the result from the table in the instructions for Form 8962, line 7
8.Multiply line 4 by line 7
9.Divide line 8 by 12.0
10.Enter the monthly premium for the second lowest cost silver plan premium that covers everyone in your tax household for whom a personal exemption deduction is claimed, who isn't eligible for minimum essential coverage (other than coverage in the individual market), and who doesn't qualify for another coverage exemption for the month. To find the second lowest cost silver plan go to www.HealthCare.gov/tax-tool or the Marketplace for your area
11.Subtract line 9 from line 10. If zero or less, enter -0-
12.Subtract line 11 from line 1. If zero or less, enter -0-. This is the individual's required contribution for the month
13.Is the individual eligible for this coverage for every month of the year?
box Yes. Multiply line 12 by 12.0. This is the annualized premium. Enter this amount in the space for every month on the Affordability Worksheet
box No. Multiply line 12 by 12.0. This is the annualized premium. Enter this amount in the space on the Affordability Worksheet for each month the individual was eligible for the coverage being tested
*If the individual filed Form 1040, figure the nontaxable social security benefits received by that individual by subtracting Form 1040, line 20b from Form 1040, line 20a. If the individual filed Form 1040A, figure the nontaxable social security benefits received by that individual by subtracting Form 1040A, line 14b from Form 1040A, line 14a. If the individual filed Form 1040EZ, he or she should have received a Form SSA-1099 or Form RRB-1099 showing the social security benefits received by that individual, all of which were nontaxable.

Example 3—unmarried individual with no dependents and no employer coverage.(p9)

Eastin is unmarried and has no dependents. His household income is $40,000. He can't enroll in employer coverage for any month in 2015. 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 2015 because his required contribution is $3,300 ($5,000 minus $1,700), which is more than 8.05% of his household income ($3,220, which is $40,000 multiplied by 0.0805).
taxmap/instr/i8965-007.htm#en_us_publink10006675
Short coverage gap (code B).(p9)
rule
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 isn't 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 isn't exempt for any of those months.

Example—multiple gaps in coverage.(p9)

Colton had coverage for every month except February, March, October, and November. Colton is eligible for the short coverage gap exemption only for February and March.

Example—gaps in coverage for partial months.(p10)

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.
taxmap/instr/i8965-007.htm#en_us_publink100032500
Continuous coverage gap straddles more than one taxable year. (p10)
If you do not have minimum essential coverage for a continuous period that begins in one taxable year and ends in the next, for purposes of applying the short coverage gap rules to the first taxable year, the months in the second taxable year included in the continuous period are not counted. For purposes of applying the short coverage gap rules to the second year, the months in the first taxable year are counted.

Example—Continuous coverage gap straddles more than one taxable year.(p11)

Fran, an unmarried taxpayer with no dependents, has minimum essential coverage from January 1 through October 31, 2015. Fran is without coverage until February 1, 2016. On her tax return for 2015, November and December of 2015 are treated as a short coverage gap. On her 2016 tax return, November and December of 2015 are included in the continuous period that includes January 2016. The continuous period for 2016 is not less than 3 months, and therefore January is not part of a short coverage gap.
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 Columns (d) - (p)—Calendar Months, later.
taxmap/instr/i8965-007.htm#en_us_publink10006681
Citizens living abroad and certain noncitizens (code C).(p11)
rule
You can claim a coverage exemption for yourself or another member of your tax household to which any of the following apply.
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 Columns (d) - (p)—Calendar Months, later. If you meet one of these conditions, you qualify for this exemption even if you have a social security number (SSN).
taxmap/instr/i8965-007.htm#en_us_publink10006676
Members of a health care sharing ministry (code D).(p12)
rule
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 Columns (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.
taxtip
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.
taxmap/instr/i8965-007.htm#en_us_publink10006677
Members of Indian tribes or individuals otherwise eligible for services from an Indian health care provider (code E).(p12)
rule
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 Columns (d) - (p)—Calendar Months, later.
taxtip
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.
taxmap/instr/i8965-007.htm#en_us_publink10006678
Incarceration (code F).(p12)
rule
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 Columns (d) - (p)—Calendar Months, later.
taxtip
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.
taxmap/instr/i8965-007.htm#en_us_publink10006679
Aggregate self-only coverage considered unaffordable (code G).(p12)
rule
You and any other members of your tax household for whom you claim a personal exemption can claim a coverage exemption for all months in 2015 if, for at least 1 month in 2015:
  1. The cost of self-only coverage through employers for two or more members of your tax household doesn't exceed 8.05% of household income when tested individually,
  2. The cost of family coverage that the members of your tax household described in condition 1 could enroll in through an employer exceeds 8.05% of household income, and
  3. The combined cost of the self-only coverage identified in condition 1 exceeds 8.05% of household income.

Example 1—two offers of self-only coverage that together are unaffordable.(p12)

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 isn't 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 doesn't exceed 8.05% of the household income when tested individually, the cost of family coverage exceeds 8.05% of the household income, and the combined cost of the self-only coverage offered to Justin and Sally exceeds 8.05% of the household income.

Example 2—affordable family coverage.(p13)

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 doesn't exceed 8.05% of the household income.

Example 3—one spouse enrolls in coverage.(p13)

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).
taxmap/instr/i8965-007.htm#en_us_publink100033351
Resident of a state that did not expand Medicaid (code G).(p13)
rule
You can claim a coverage exemption for yourself or another member of your tax household for 2015 if:
For purposes of this exemption, your household income is increased by the amount of any nontaxable social security benefits received by you, your spouse (if filing jointly) or a dependent you claimed that must file his or her own tax return. 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 didn't 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).
taxtip
If you were granted a similar coverage exemption for individuals who resided in a state that didn't expand Medicaid, see the instructions for Part I, earlier, to report the exemption.
taxmap/instr/i8965-007.htm#en_us_publink100032554
Member of tax household born, adopted, or died (Code H).(p13)
rule
If you had or adopted a child during 2015, you can claim a coverage exemption for that child for the months before the child was born or adopted. If a member of your tax household died during 2015, you can claim a coverage exemption for the months following his or her death. 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 Columns (d) - (p)—Calendar Months.
taxmap/instr/i8965-007.htm#en_us_publink10006682

Columns (d) – (p)—Calendar Months(p13)

rule
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 don't check the boxes in columns (e) – (p).
taxmap/instr/i8965-007.htm#en_us_publink100032419