Form 8965 Health Coverage Exemptions Checklist –
2015 Tax Year
Form 8965 allows taxpayers to claim health coverage exemptions from the Affordable Care Act shared responsibility payment for the 2016 tax year. The individual mandate penalty rules, filing thresholds, and exemption categories change each year, making the 2016 form distinct from prior years.
This form requires identification of specific months without qualifying coverage and documentation of claimed exemption reasons. Changes to line numbering, worksheet structure, and qualifying event dates make this year's instructions unique.
Who Must File Form 8965
You must file Form 8965 if you are filing Form 1040, Form 1040A, or Form 1040EZ and cannot be claimed as a dependent by another taxpayer. The form applies when you or someone in your tax household lacked minimum essential coverage for one or more months in 2016, and you want to report or claim a coverage exemption.
Understanding Form 8965 Structure
Form 8965 contains three distinct parts, each serving a specific purpose. Part I reports
Marketplace-granted exemptions by entering the exemption certificate number provided by the
Health Insurance Marketplace. Part II claims household-level exemptions when household income or gross income falls below the filing threshold. Part III documents individual exemptions for specific family members using designated exemption codes and monthly indicators.
Completing Part I: Marketplace-Granted Exemptions
Part I reports Marketplace-granted coverage exemptions for individuals in your tax household and includes only three columns: name of individual, SSN, and exemption certificate number.
The month information from your Marketplace exemption notice does not appear in Part I, but it is used to separately determine your shared responsibility payment calculations.
Certain exemptions require Marketplace approval before filing your tax return. Members of recognized religious sects must obtain an exemption certificate number from the Marketplace, and general hardship exemptions also require a Marketplace determination and an ECN.
Completing Part II: Household Income Exemption
Part II claims an exemption for your entire household when income falls below the filing threshold. Check the box on line 7 if your household income or gross income is less than your applicable filing threshold for 2016.
Household income includes your modified adjusted gross income plus the modified adjusted gross income of each dependent required to file a tax return. If you qualify for this exemption, everyone in your tax household is exempt for the entire year.
Calculate your household income using 2016 tax law rules and applicable income exclusions.
Compare your calculated amount to the filing threshold for your filing status, such as $20,700 for married couples filing jointly under age 65 in 2016.
Completing Part III: Individual Exemptions
Part III claims exemptions for specific individuals in your tax household using designated exemption codes. Enter the name and Social Security number of each person claiming an exemption on a separate line, select the appropriate exemption code from the Types of
Coverage Exemptions chart, and indicate the applicable months by marking columns (d)
through (p).
Standard exemption codes include Code A for coverage considered unaffordable when the required contribution exceeds 8.13% of household income, Code B for short coverage gaps lasting less than three consecutive months, Code C for citizens living abroad and certain noncitizens, Code D for members of health care sharing ministries, Code E for members of federally recognized Indian tribes, and Code F for incarceration after the disposition of charges.
Health Care Sharing Ministry Exemptions
Health care sharing ministries qualify as an exemption category under the 2016 Affordable Care
Act rules. Members must document their membership status in accordance with entity eligibility standards and the unique 2016 tax-year documentation requirements.
As of September 1, 2016, the Marketplace no longer granted exemptions for health care sharing ministry members, tribal members, or incarcerated individuals, except in Connecticut. Taxpayers with an ECN issued by the Marketplace for these exemptions may report the ECN on Form
8965 filed with their 2016 income tax return, while taxpayers who qualify but lack an ECN may claim them directly on Part III.
Documenting Hardship Exemptions
Hardship exemptions require specific documentation of qualifying circumstances that occurred during 2016, including homelessness, domestic violence, eviction, or foreclosure. The 2016 instructions include expanded guidance on documenting hardship exemptions following administrative updates to recognized hardship categories that took effect during that tax year.
Verifying Coverage and Exemption Alignment
Your exemption claim must align with the 2016 definition of qualifying health coverage. Minimum essential coverage includes Marketplace plans, employer-sponsored insurance, Medicare Part
A, Medicare Advantage, Medicaid programs, CHIP programs, and certain other coverage types as defined in the 2016 form instructions.
Final Review and Submission
Review all entries for accuracy before signing and dating the form. Verify that month indicators, exemption codes, and income figures reflect 2016 data only, and ensure all information matches the corresponding lines specified in the 2016 tax return instructions.
Attach all required documentation, such as letters confirming hardship status, membership certifications, or residency documentation, as outlined in the 2016 instructions. Attachment requirements changed between tax years, so verify you are following 2016-specific guidance when preparing your submission.
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