California Mandate Penalty Exemptions
- Income is below the tax filing threshold
- Health coverage is considered unaffordable (exceeded 8.24% of household income for the 2020 taxable year)
- Families’ self-only coverage combined cost is unaffordable
- Short coverage gap of 3 consecutive months or less
- Certain non-citizens who are not lawfully present
- Certain citizens living abroad/residents of another state or U.S. territory
- Members of health care sharing ministry
- Members of federally-recognized Indian tribes including Alaskan Natives
- Incarceration (other than incarceration pending the disposition of charges)
- Enrolled in limited or restricted-scope [Share of Cost?] Medi-Cal or other coverage from the California department of Health Care Services FTB.Gov *
Exemptions Processed by Covered California
- Religious conscience exemption
- Affordability hardship
- General hardships
Federal Tax Penalty Information
Covered CA Websites Exemptions for California Mandate
Review Your Health Coverage Exemption Options
The individual shared responsibility provision requires you, your spouse, and your dependents to have qualifying health insurance for the entire year, report a health coverage exemption, or make a shared responsibility payment when you file. If you are applying for an exemption from the Marketplace, you should prepare early by reviewing your options and determining if you are eligible for an exemption from the requirement to have coverage.
How you get a health coverage exemption depends on the type of exemption. The IRS has posted a chart listing the types of exemptions and how to obtain them on IRS.gov/aca. You can obtain some exemptions only from the Marketplace while others you may claim when you file your tax return. You can get some exemptions by either applying for the exemption from the Marketplace or claiming it on your return.
If you are eligible for an exemption from the Marketplace, you apply for it by filling out an exemption application that you then send to the Marketplace. If the Marketplace grants your coverage exemption, they will send you a notice with your unique Exemption Certificate Number. Keep this notice with your other important tax information. You will use the ECN when you file your tax return. Be sure to apply early so that you will receive this notice before you file your tax return. Hardship exemptions are among those exemptions that you must request through the Marketplace. To qualify for a hardship exemption you must have experienced circumstances that prevented you from obtaining coverage under a qualified health plan. Those circumstances include homelessness, eviction, foreclosure, domestic violence, death of a close family member and unpaid medical bills.
For more information about obtaining exemption from the Marketplace, go to HealthCare.gov.
For a health coverage exemption that you qualify to claim on your tax return, you do not need to call or obtain the exemption from the IRS in advance. All you need to do is complete Form 8965, Health Coverage Exemptions Part III and file it with your tax return. Use a separate line for each individual and exemption type claimed on the return.
If you do not have coverage and your income is below the filing requirement threshold for your filing status, you and your family are exempt and you will not have to make a shared responsibility payment. In this situation, you do not have to file a return to claim the coverage exemption. However, if you choose to file a return, then you will use Part II of Form 8965, Coverage Exemptions for Your Household Claimed on Your Return. Exemptions that you can claim on your tax return include exemptions for lack of affordable coverage, a short coverage gap, non-citizens not lawfully present in the United States, and certain citizens living abroad.
Find out if you qualify for an exemption by using our interactive tool, Am I required to make an Individual Shared Responsibility Payment. For information about claiming and reporting exemptions, visit IRS.gov/aca.
Individuals residing outside United States or residents of territories Any applicable individual shall be treated as having minimum essential coverage for any month—
(A) if such month occurs during any period described in subparagraph (A) or (B) of section 911(d)(1) which is applicable to the individual, or
(B) if such individual is a bona fide resident of any possession of the United States (as determined under section 937(a)) for such month.
911(d)(1) Citizens or residents of the United States living abroad
Definitions and special rules
For purposes of this section—
(1) Qualified individual The term “qualified individual” means an individual whose tax home is in a foreign country and who is—
(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or
(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period.
Obtaining and Claiming a Health Coverage Exemption
The Affordable Care Act requires you and each member of your family to have minimum essential coverage, qualify for an insurance coverage exemption, or make an individual shared responsibility payment for months without coverage or an exemption when you file your federal income tax return.
You, your spouse or your dependents may be eligible to claim an exemption from the requirement to have coverage and are not required to make a payment. .For any month that you do not qualify for a coverage exemption, you will need to have minimum essential coverage or make a shared responsibility payment.
You can claim most exemptions when you file your tax return. However, you must apply for certain exemptions in advance through the Health Insurance Marketplace, You may be exempt if:
- The minimum amount you must pay for the annual premiums is more than 8.05 percent of your household income
- You have a gap in coverage that is less than three consecutive months
- You qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement
Claiming an exemption when you file
You will claim or report coverage exemptions on Form 8965, Health Coverage Exemptions, and attach it to Form 1040, Form 1040A, or Form 1040EZ. You can file each of these forms electronically.
If your income is below your filing threshold and you are not required to file a tax return, you are eligible for an automatic exemption and you do not have to file a tax return to claim it. You do not need to file a return solely to report your coverage or to claim a coverage exemption.
However, if you choose to file a tax return, you will use Part II, Coverage Exemptions for Your Household Claimed on Your Return, of Form 8965 to claim a health coverage exemption. You should not make an individual shared responsibility payment if you qualify for this exemption because your income is below the filing threshold.
You can claim other IRS-granted coverage exemptions on your tax return using Part III, Coverage Exemptions for Individuals Claimed on Your Return, of Form 8965. For a coverage exemption that you qualify to claim on your tax return, all you need to do is file Form 8965 with your tax return. You do not need to contact the IRS to obtain an exemption in advance.
Reporting Marketplace granted exemptions
If you are granted a coverage exemption from the Marketplace, they will send you a notice with your unique Exemption Certificate Number or ECN. You will enter your ECN in Part I, Marketplace-Granted Coverage Exemptions for Individuals, of Form 8965 in Column C.
If the Marketplace hasn’t processed your exemption application before you file your tax return, complete Part I of Form 8965 and enter “pending” in Column C for each person listed. If you can claim the exemption on your return, you do not need an ECN from the Marketplace.
Taxpayers and their tax professionals should consider filing returns electronically. Using tax preparation software is the best and simplest way to file a complete and accurate tax return as it guides individuals and tax preparers through the process and does all the math. There are a variety of electronic filing options, including free volunteer assistance, IRS Free File for taxpayers who qualify, commercial software, and professional assistance.
Form 8965, Health Coverage Exemptions
For more information about the Affordable Care Act and filing your 2015 income tax return, visit IRS.gov/aca.
Subscribe to IRS Tax Tips to receive easy-to-ready tips from the IRS by e-mail.
Find Out More about Income-Based Health Coverage Exemptions
The individual shared responsibility provision requires you and each member of your family to have health care coverage, have an exemption from the coverage requirement, or make an individual shared responsibility payment for any month without coverage or an exemption when you file your federal income tax return.
You do not need to file a return solely to report your coverage or to claim an exemption if you are not otherwise required to file.
If you are not filing a federal income tax return because your gross income is below your return filing threshold, you are automatically exempt from the shared responsibility provision for that year. You do not need to file a tax return to claim an exemption from coverage and you should not make an individual shared responsibility payment.
If you are not required to file a tax return for a year but choose to file one anyway, you should claim the coverage exemption on Form 8962, Health Coverage Exemptions, when you file your tax return.
To learn more about coverage exemptions, visit IRS.gov/aca, or use our interactive tool, Am I Eligible for a Coverage Exemption or Required to Make an Individual Shared Responsibility Payment?
You or your tax professional should consider preparing and filing your tax return electronically. Using tax preparation software is the easiest way to file a complete and accurate tax return. There are a variety of electronic filing options, including free volunteer assistance, IRS Free File for taxpayers who qualify, commercial software, and professional assistance.
extended to 4.30.2015 if you didn’t know about the mandate tax penalty!
Lenience for non grandfathered policies that were cancelled.
Federal Health Coverage Exemptions
Individuals who go without coverage or experience a gap in coverage may qualify for an exemption from the requirement to have coverage.
- You may qualify for an exemption if one of the following applies:
- You do not have access to affordable coverage
- You have a one-time gap of less than three consecutive months without coverage
- You qualify for one of several other exemptions, including a hardship exemption
- How you get an exemption depends upon the type of exemption. You can obtain some exemptions only from the Marketplace in the area where you live, others only from the IRS when filing your income tax return, and others from either the Marketplace or the IRS. For more information, visit gov/aca or see the instructions to Form 8965.
- If you qualify for an exemption, you use Form 8965 to report a coverage exemption granted by the Marketplace or to claim a coverage exemption on your tax return.
Form 8965 Exemptions & Mandate Penalty – Instructions
IRS Form 8965 – Health Coverage Exemptions
Instructions – including penalty calculation
Resources, Links & Forms
Findlaw on Exemptions
Child & Related Pages
FAQ – What if you were out of country and didn’t have a residence to calculate if premiums were over 8%?
- Health Sharing Ministries – Not Protected by Insurance Guarantees
- Lawfully Present – Public Charge – Immigration Status
- §5000 A – Requirement to maintain Health Insurance
- 10 Reasons that you need Health Insurance
- Exemptions from CA Mandate Penalty