As you’re now probably aware, the Affordable Care Act imposes strict penalties for taxpayers who don’t have health insurance. However, exemptions apply in some circumstances, which can excuse the penalty from taxpayers who meet the requirements. Form 8965, Health Care Exemptions, can be filed with a tax return and used to claim a hardship exemption or another qualifying exemption. This form allows the uninsured to avoid a penalty assessment.

It’s important that you request specific exemptions at the right times. Depending on which exemption you qualify for, you either need to request it through the Marketplace or when you file your taxes. Some can be requested at any time, so you need to know which is which.

Marketplace Exemptions

First, you need to apply and then receive the exemption certificate number, so you can complete your tax return. These exemptions are:

  • Members of a religious organization declared by the Social Security Administration to be against insurance.
  • Coverage is not affordable due to estimated household income amounts
  • Medicaid exemption for those in a state where the eligibility requirements have not yet been revised to meet greater patient demand
  • Non-renewal of current coverage, and other options are not economical
  • You do not qualify for a Marketplace insurance plan due to extenuating circumstances.

Form 8965 Exemptions

Claim these exemptions when you file your return using Form 8965:

  • Health insurance coverage is unaffordable based on income
  • A short gap in coverage applies
  • Total income for the household is less than the required threshold
  • Individual is not currently residing in the US.

Other Exemptions

Exemptions that can be requested through any method at any time are as follows:

  • Incarceration
  • Member of a health sharing ministry that is recognized by the federal government
  • You are of Native American or Alaskan Native descent, or a spouse of someone of this descent, and are eligible to receive health coverage through a special provider
  • You are a Native American Tribe member
  • Coverage is unaffordable
  • you have a temporary lapse of coverage in the beginning of the tax year but have received Marketplace coverage.