This information applies to tax year 2018 and prior. The Tax Cuts and Jobs Act of 2017 repealed the Shared Responsibility Payment after tax year 2018, therefore taxpayers who don’t have coverage during 2019 or later do not need an exemption in order to avoid the penalty.
Resident of a State that did not expand Medicaid (code "G") - If the taxpayer lived at any time during the tax year in one of the States that did not expand Medicaid and their household income was below 138% of the federal poverty level for their family size, the taxpayer may be eligible to claim a Coverage Exemption to the Shared Responsibility Payment under the Affordable Care Act (ACA). This exemption from the requirements of the ACA can be obtained by filing an application with the Federal Marketplace or a state based exchange for a Marketplace Granted Exemption or the exemption can be claimed directly on Form 8965 as a Coverage Exemption. This exemption is not available to any taxpayer that resides in a state that expanded Medicaid under the guidelines of the ACA.
If the taxpayer applied for an exemption through the Health Insurance Marketplace, the determination of whether they qualified was made by the Marketplace and the taxpayer should use the Exemption Certificate Number provided to the taxpayer and claim the exemption as a Marketplace Coverage Exemption. However, if the taxpayer did not apply for a Marketplace Granted Exemption and is claiming this exemption as a Coverage Exemption on Form 8965, the determination of eligibility for the exemption is made by the taxpayer. To be eligible for this exemption the tax household's income must be below 138% of the federal poverty levels for the current tax year for the 48 Contiguous States and the District of Columbia; or when applicable Hawaii and Alaska. The current federal poverty level can be found in the Instructions for Form 8962 and at Healthcare.gov.
To enter a Resident of a State that did not expand Medicaid Coverage Exemption from the Main Menu of the Tax Return (Form 1040) select:
- Other Taxes Menu
- Health Coverage Exemptions/Responsibility Payment (8965)
- Part III –Coverage Exemptions
- Select 'New' and double-click on the individual that is claiming the exemption.
- Select ‘Exemption Type and then select Resident of a state that did not expand Medicaid (code "G") from the list provided. Select OK, or press Enter.
- Select ‘Months Claiming Exemption’ and select the month(s) that the Resident of a state that did not expand Medicaid Coverage Exemption applies.
This process should be repeated for each person on the tax return who is claiming a Resident of a state that did not expand Medicaid Coverage Exemption.
NOTE: This is a guide on entering a Resident of a State that did not expand Medicaid Coverage Exemption into the tax program program. This is not intended as tax advice.
Instructions for Form 8965
Affordable Care Act: What You and Your Family Need to Know