Do you qualify for an exemption from the Individual Shared Responsibility Payment?

January 19, 2016

If you didn’t have health care coverage in 2015, before you submit your 2015 Individual Tax Return, see if you qualify for an exemption from the Individual Shared Responsibility Payment (ISRP).

Last year’s filing season saw new rules and forms around health care coverage, and a significant number of taxpayers overpaid the ISRP. Reviews by the Taxpayer Advocate Service and the IRS found that more than 300,000 taxpayers overpaid their ISRP, totaling about $35 million through April 30, 2015. Part of the issue was people not checking to see if they qualified for an exemption from the payment before filing.

How to determine if you can claim an exemption:

A complete list of exemptions is available at IRS.gov - Individual Shared Responsibility Provision – Exemptions: Claiming or Reporting page.

Some common exemptions:

    • Your gross income or your household income is less than your applicable minimum threshold for filing a tax return.
    • You are not a U.S. citizen or a U.S. national, and are not an alien lawfully present in the U.S.
    • You experienced circumstances that prevented you from obtaining coverage under a qualified health plan (homelessness, eviction, foreclosure, domestic violence, death of a close family member, unpaid medical bills - these are known as hardship exemptions).
    • You were notified that your health insurance policy was not renewable and you consider the other plans available unaffordable. (Health and Human Services has more information on this).
    • You are determined ineligible for Medicaid solely because the State in which you live does not participate in Medicaid expansion under the Affordable Care Act.

There are even more exemptions for which you and your family may be eligible.

Claiming and reporting the exemption:

Be aware that you must apply for some exemptions through the Health Insurance Marketplace (Healthcare.gov), and claim others through the IRS.

IRS.gov has a chart showing each exemption and which agency grants them, along with information on how to claim and report them.

If the exemption is granted by the Marketplace, you will get a code - an Exemption Certificate Number or ECN. You will put that code on the IRS Form 8965, Health Coverage Exemptions, and file it with your federal tax return. You will use the same form to claim exemptions offered by the IRS.

As with any tax form, double-check your information before filing.