Form 8965 2018 Health Coverage Exemptions
Checklist
Form 8965 allows taxpayers to claim health coverage exemptions from the Affordable Care Act individual shared responsibility payment for the 2018 tax year. This IRS form applies to individuals who lacked minimum essential coverage for one or more months during 2018 or who experienced qualifying hardships that prevented them from obtaining health insurance coverage. The 2018 tax year represents the final year of active enforcement before the Tax Cuts and Jobs Act reduced the individual mandate penalty to zero for 2019 and subsequent years.
Understanding 2018 Exemption Eligibility
You must determine whether you qualify for a coverage exemption during 2018 before calculating any potential shared responsibility payment. Exemptions include religious conscience objections for members of recognized religious sects established before December
31, 1950, Native American tribal membership, and membership in health care sharing ministries that have operated continuously since December 31, 1999.
Hardship Categories for Tax Year 2018
Review the 2018 hardship exemption list to identify qualifying events that occurred during the tax year. Recognized hardships include homelessness, eviction proceedings, utility shutoff notices, bankruptcy filings, domestic violence, substantial medical debt, and loss of employer-sponsored coverage.
You must have experienced the hardship in the same year you claim the exemption on your federal tax return. Temporary difficulties that did not result in extended coverage gaps do not automatically qualify you for a full-year exemption.
Coverage Gap Duration and Short Gap Exemptions
Document each month in 2018 during which you lacked qualifying health insurance to determine whether you are eligible for the short coverage gap exemption. Gaps of less than three consecutive months qualify for this exemption using Code B on Form 8965, while gaps of three or more successive months require either another exemption type or result in shared responsibility payment liability.
Documentation Requirements for Hardship Claims
Collect supporting documents for any hardship exemption you claim on 2018 Form 8965, including utility shutoff notices, eviction notices, bankruptcy court filings, or healthcare provider letters confirming inability to pay medical costs. The 2018 instructions require that you retain these documents, but do not file them with your tax return unless the Internal Revenue Service requests them explicitly during an audit or review.
Completing Form 8965 Part I
Enter your name, Social Security number, and date of birth on Form 8965 Part I for yourself and any household members who lacked coverage. List all months during 2018 when you or your dependents lacked health insurance coverage or claimed an exemption.
The 2018 form requires you to indicate whether each month included qualifying coverage, a gap, or an approved exemption by marking the appropriate boxes. If you received an Exemption
Certificate Number from the Health Insurance Marketplace, enter it in the designated column.
Shared Responsibility Payment Screening Questions
Address the screening questions in Part II of the 2018 form to determine whether you had a filing requirement and potential payment liability. The 2018 instructions direct you to answer whether you were a U.S. citizen or resident alien, maintained household income above the filing threshold, and filed or were required to file a 2018 Form 1040.
Reporting Exemptions in Part III
Enter hardship exemptions in Part III using the corresponding exemption code from the 2018 instructions if you claim coverage exemptions on your tax return rather than through the
Marketplace. Each code corresponds to a specific qualifying event recognized by the IRS for the
2018 tax year, such as Code B for short coverage gaps or Code G for general hardship.
The instructions provide a detailed reference table that links codes to hardship categories and requires you to select only codes applicable to your specific 2018 circumstances. You may claim multiple exemption types for different months or household members on the same form.
Calculating the 2018 Shared Responsibility Payment
Part IV explains how to determine the individual shared responsibility payment when a full-year exemption does not apply. For 2018, the required payment is based on whichever is higher: 2.5 percent of household income above the filing threshold, or a flat-dollar charge per person.
Under the flat-dollar method, the 2018 amounts remained $695 per adult and $347.50 per child under age 18, subject to a household cap of $2,085. Although the law allows for annual inflation adjustments, no increase was applied for 2018 because the adjustment formula did not produce a change after rounding.
Religious Conscience and Membership Exemptions
You may claim religious or membership-based exemptions in Part I or Part III without additional hardship documentation if you qualify. Members of religious sects that have existed since
December 31, 1950; individuals who rely exclusively on faith-based healing; and members of health care sharing ministries that have operated since December 31, 1999, must meet the specific criteria outlined in the 2018 instructions.
Filing Requirements and Procedures
When claiming a health coverage exemption or reporting a lapse in coverage, Form 8965 must be attached to your completed 2018 tax return. Under the 2018 instructions, filing is still required even if no shared responsibility payment is owed, provided a coverage gap occurred, or an exemption is claimed.
This form functions as both proof of exemption eligibility and a reconciliation of your coverage status with IRS records. For taxpayers required to file Form 8965, any qualifying short coverage gap lasting fewer than three consecutive months must be reported in Part III using Code B.
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