New Forms to show who was covered by insurance & what months. 

1095A—Health Insurance Marketplace.  Must have to do return if bought insurance at the Marketplace (healthcare.gov).
Also used for form 8962 to see if taxpayer gets additional credit or has to repay part of subsidies.  

1095B—Health Coverage by Insurance Company.  Not needed to file. Insurance company has till 3-30-16 to send.

1095C—Employer Provided Health Insurance & Offer of insurance.   Not needed to file. Employer has till 3-30-16 to send. If Offer of Insurance is greater than 8% of income, taxpayer is exempt.

If 1095B & C not received by 1/31, if taxpayer is uncertain that all were covered by insurance for each month, they may be able to get information from insurance company or employer.  Otherwise may use taxpayer's information.

Completing 1040 Line 61:  Health Care—Individual Responsibility

Taxpayers are responsible for medical insurance for themselves and their dependents (even if child lives with X/spouse) even if they do not claim dependent (except if dependent is properly claimed on another return or can be claimed by a taxpayer with a higher priority under the tie-breakers rules (see dependency rules.)

Can’t not claim dependent to get around penalty.

Dependents not subject to law.  Nothing to do on their returns. 

Taxpayers are exempt from law if gross income < Filing Requirement. See exemptions & filing requirement in  next 2 columns. 

Penalty & exemptions include dependent’s income (household income) if dependent required to file a return.  >$6300 under  65.

At line 61 of 1040,

“Did you have medical insurance for you, spouse & all dependents for the entire year?" 

"Was anyone covered through Obamacare?”  

  • If yes to 2nd question need 1095A to complete return.
  • The fact the W-2 shows medical insurance doesn’t mean it covered the whole year or covered spouse & dependents.
  • If everyone covered the entire year, check Full box on 1040 line 61 for full year coverage.
  • If everyone not covered by insurance the entire year check None box: 
  1. If qualifies for exemptions to penalty (see next page) complete 8965 & worksheet at line 61. Click Exm box on worksheet & check months didn’t qualify. (Also do 8965)
  2. If doesn’t qualify for exemption, do penalty on Shared Responsibility worksheet at line 61.
    Complete worksheet & form 8965  for part year coverage or dependents not covered. Check months not covered.
  3. If individual was covered by marketplace, check Mkt box.  

To determine penalty use household income and filing threshold.

  • Household Income = MAGI income (AGI + tax exempt interest) Plus dependent's MAGI if > $6300.
  • Filing threshold.     Single        HH           Married    MFS      Widow                                                             
    under 65 is:              $10,300      $13,250   $20,600    $4,000   $16,600  
    one 65 & older:         $11,850      $14,800   $21,850    $5,450   $17,850 
    both 65 & older                                            $23,100 
  • The penalty is the higher of either 2% of household income above filing threshold or a flat dollar amount of $325 per adult plus $162 per child (up to a maximum of $975). 

The penalty is the higher of 1 or 2 below:

  • 1.Household Income (see above)            $________           

minus filing threshold                        $________

Total X 2%                                          $=_______ X .02 $=_______

  • 2. $325 per adult not covered                   $________

$162 a child <18 not covered            $+_______

             Total                                                  $=_______  

             Enter lessor of total or $975             $=_______

  • 3. Select larger of section 1 or 2 for 12 month penalty           $________

  • 4. Penalty is prorated on worksheet by months had coverage or had an exemption.

The most common exemptions are:

Gross Income is Below Filing Threshold (see below).  If qualifies Check 2nd Box Part 2 Form 8965.  It includes gross rents, gross capital gains & other taxable income.

          Filing threshold.     Single        HH           Married    MFS      Widow                                                             
           under 65 is:              $10,300      $13,250   $20,600    $4,000   $16,600  
           one 65 & older:         $11,850      $14,800   $21,850    $5,450   $17,850 
           both 65 & older                                            $23,100    

Household Income* < Filing Threshold (see above) If qualifies Check 1st Box Part 2 Form 8965:  Includes dependent MAGI if dependent required to file. >$1000 unearned, >$6300 under 65, >$7900 1 age 65+

        *Household income = MAGI (AGI + tax exempt interest + foreign earned exclusions) + MAGI of dependents required to file.

Direct Exemptions (Form 8965)

Gross Income Is Below Filing Threshold (see below)

  • Check 2ND  Box Part 2 Form 8965.
  • Includes gross rents, gross capital gains & other taxable income. 

Filing threshold.     Single        HH           Married    MFS       Widow                                                             
under 65 is:              $10,150     $13,050    $20,300    $3,950    $16,350  
one 65 & older:        $11,700     $14,600    $21,500     $3,950    $17,550       

Household income* < filing threshold. (see above)

  • Check 1st  Box Part 2 Form 8965:
  • Includes dependent MAGI if  dependent required to file:
     >$1000 unearned,  >$6200 under 65, >$7750  1 age 65+.                   
  • *Household income =   MAGI (AGI + tax exempt interest + foreign earned exclusions) + MAGI of dependents required to file 

Premium is >8% of household* income.  
Use Affordability worksheet.   Use code A Sec. 3 of 8946 

  • Part A: Enter 8% of household income (defined in 2c above) + insurance premium paid through salary reduction. 
  • Part B: Enter Required Contribution as follows.

1. Below each name list annual premium for each month for the first option below that applies:

a. The lowest cost self-only policy offered by employer**
b  The lowest cost family policy offered by employer**.
c. Amount from Marketplace Affordability wkst.(complicated)
** Use Statement of Benefits (Form 1094) from employer.

2.         a. If premium is same for year enter amount for each month. 

b. Modify premiums that cover only part of year:

1. Enter premiums paid for person             $______
2. Enter number of months paid                    ______
3. Divide line  1 by line 2                               ______
4. Multiply line 3 X 12 for annual premium  $______
3. Individual exempt each month where premium > 8% of income.

Combined cost of employer self-only for 2 or more family members >8%   Use code G Sec. 3 of 8946 

  • and each member’s employer self-only coverage is < 8%
  • and the cost of for family coverage is also over 8%

Coverage gap < 3 months in a row.  Use code B Sec. 3 of 8946 

  • If more than 1 coverage gap, exempt only for first gap.  
  • If gap of 3 months or more, does not qualify for any exemption.
  • Is consider covered for month if covered just 1 day.

Gap at start of year & purchased on Marketplace during initial enrollment. Use code G Sec. 3 of 8946

Health Care Sharing Ministry: Use code D Sec. 3 of 8946 Count any month they were covered at least 1 day.

Members of Federally Recognized Indian Tribes. (claim if at least day in month) Use code E Sec. 3 of 8946

Individuals Incarcerated. Use code F Sec. 3 of 8946  Individual is covered for that month if incarcerated for 1 day.

Applied for CHIP (Child Health Ins.) during initial enrollment and had a gap.   Use code G Sec. 3 of 8946

Citizens or living abroad > 330 days or neither citizen or U.S. national nor an alien lawfully present in the U.S. Use code C 

2013 to 2014 fiscal year employer-sponsored plan.  Only claim in 2014  Use code H Sec. 3 of 8946 

Marketplace Exemptions 


Requires a  3-8 page application to request Certificate Number. Dependent Income not needed.                

Each individual requires their own certificate number. If an individual granted more than one exemption complete a separate line for each exemption.

If not exempt for all months enter months not exempt on Shared Responsibility Payment Worksheet. 

If Marketplace has not processed application before returned is filed, complete Part I of 8965 & enter “pending” in column c for each individual.

Print the correct application at www.healthcare.gov

Mail to Health Insurance Marketplace—Exemption Processing, 465 Industrial Blvd, London, KY  40741

The seven exemption applications are:  (Documentation to attach)

  • 1. Unable to Afford Coverage 8 Pages  (For Indiana use application for a state using healthcare.gov): Must include income & expense information for you & dependents.(year-end pay stubs, W-2’s, …)  Info. about job-related health insurance.
  • 2. Unable to Afford Coverage (for states with a state exchange) 
  • 3. Hardship:   exemption is only good for the month before hardship occurs, the month after & the duration of hardship. 

Enter below hardship number in Box 8 on page 3 of application:

a. Taxpayer was homeless. (None required)
b. Evicted in past 6 month or facing eviction or foreclosure. (Copy of notice)                    
c. Shut-off notice from utility company.  (Copy of notice)
d. Experienced domestic violence. (None required)                                                    
e. Death of close family member. (Death cert. or notice in paper)
f. Substantial damage to your home. (Fire report, insurance papers)
g. Filed for bankruptcy in last 6 months. (Copies of bankruptcy filing)
h. Medical bills couldn’t pay in last 24 mo. (Copies of medical bills)
i. Unexpected increase in expense for ...  (Copies of receipts related to ill, disabled or aging family member, care)
j. Expected to claim a child who was denied Medicaid & CHIP & other person court order to give medical support. (Copy of medical support order) (Denials from Medicaid & CHIP)
k. As a result of appeal decision you’re eligible for enrollment in alternative plans. (Copy of appeal decision)
l. Ineligible for Medicaid because state didn’t expand (Includes Indiana). (Ineligible paperwork from Medicaid) 

Medicaid Exemption:         1 person    2 people     3 people    4 people    5 people  
if Household Income is   <  $11,490    $15,150      $19,530     $23,550     $27,570  

m. Insurance cancelled & other plans unaffordable. (Copy of cancellation)
n. Taxpayer experienced another hardship in obtaining insurance. (Supporting documentation if possible)

  • 4. Indians, Alaska Natives & others eligible to receive Indian health care.            
  • 5. Membership in religious sects.  Don’t have to be SS exempt. Enter certificate # Part 1 896
  • 6. Health Care Sharing Ministry Members.  (Name-address of ministry) Use code D Sec. 3 of 8946. Count any month they were covered at least 1 day.  (Dates covered)
  • 7. Incarcerated. (Dates incarcerated. Facility name, address)

Give us a call if you have questions or we can be of help, 765-452-8000.  Killingbeck Insurance & Tax Preparation, Kokomo, Indiana.