The information below is for tax years 2018 and prior. Beginning with tax year 2019, the Shared Responsibility Payment no longer applies and Form 8965 is unavailable.
Under the Affordable Care Act, there were four types of exemptions that an individual could claim to avoid the Shared Responsibility Payment. These exemptions are
- Marketplace–Granted Coverage Exemptions, issued by a state exchange or the Federal Marketplace
- Coverage Exemptions which the taxpayer claims if they qualify
- Household Income Below Filing Threshold
- Gross Income Below Filing Threshold
Marketplace-granted coverage exemptions are for specified reasons and the taxpayer must have applied for the exemption with the Marketplace or state exchange. Each individual on the tax return is treated separately and each person on the tax return must apply for a Marketplace coverage exemption.\
When the exemption is approved by the federal Marketplace or state exchange, the taxpayer is issued a 5-, 6-, or 7-digit Exemption Certificate Number (ECN), which is entered in Part I of Form 8965 included with their tax return. If their application for the exemption has not been determined yet, they can submit their return with PENDING instead of an ECN number.
Coverage Exemptions granted by the marketplace include the following:
- Members of Health Care Sharing Ministries
- Members of Indian Tribes
- Incarceration
- Members of certain religious sects
- Being ineligible for Medicaid in a state that does not expand Medicaid coverage
- General Hardship
- Coverage Being Deemed Unaffordable
- Enrolled in a Medicaid plan that does not meet the minimum coverage requirements
To enter a Marketplace-granted coverage exemption, from the Main Menu of the tax return (Form 1040) select:
- Other Taxes
- Health Coverage Exemptions / Responsibility Payment (8965)
- Part I – Marketplace Granted Coverage Exemptions - Click New and double-click the individual that has the exemption.
- Exemption Certificate Number - Enter the number provided by the Marketplace. If the exemption certificate number is five or six digits, you should add zeros to the beginning to make it a seven-digit number. After entering the number, click Ok or press Enter.
- Months Granted Exemption - Select each month to which the exemption applies.
This process should be repeated for each person on the tax return who has a ECN.
Note: This is a guide on entering Marketplace-Granted Coverage Exemptions into the TaxSlayer Pro program. This is not intended as tax advice.
Additional information:
Healthcare.Gov Find health care coverage exemptions that work for you
Publication 5187 Affordable Care Act: What You and Your Family Need to Know