Beginning with the 2019 tax year (for which tax returns are filed in early 2020), the Shared Responsibility Payment or penalty for not having minimum essential health coverage no longer applies. As a result, a taxpayer who does not have health coverage in 2019 or later, does not need an exemption to avoid the penalty and Marketplace Exemptions do not apply for tax years after 2018.
Form 8965 – Health Coverage Exemptions was retired as a tax form starting in 2019. The information set forth below applies to tax years before 2019.
Household Income Below Filing Threshold
A taxpayer is exempt from the requirement to have minimum essential health care coverage and is not subject to the Shared Responsibility Payment if either their Household Income or their Adjusted Gross Income is deemed below the filing threshold for their applicable filing status.
The filing threshold exemption amounts for individuals under age 65 are as follows:
| Filing Status | 2019 | 2018 | 2017 | 2016 | 2015 |
| Single | N/A | $12,000 | $10,400 | $10,350 | $10,300 |
| Head of Household | N/A | $18,000 | $13,400 | $13,350 | $13,250 |
| MFJ | N/A | $24,000 | $20,800 | $20,700 | $20,600 |
| MFS | N/A | $5 | $4,050 | $4,050 | $4,000 |
| Qualifying Widow(er) | N/A | $24,000 | $16,750 | $16,650 | $16,600 |
The filing threshold exemption amounts for individuals age 65 and over are as follows:
| Filing Status | 2019 | 2018 | 2017 | 2016 | 2015 |
| Single | N/A | $13,600 | $11,950 | $11,900 | $11,850 |
| Head of Household | N/A | $19,600 | $14,950 | $14,900 | $14,800 |
| MFJ (one spouse 65) | N/A | $25,300 | $22,050 | $21,950 | $21,850 |
| MFJ (both spouses 65) | N/A | $26,600 | $23,300 | $23,200 | $23,100 |
| MFS | N/A | $5 | $4,050 | $4,050 | $4,000 |
| Qualifying Widow(er) | N/A | $25,300 | $18,000 | $17,900 | $17,850 |
To claim a filing threshold coverage exemption, the taxpayer must first determine Household Income as this term is defined for the purposes of Form 8965. This definition of Household Income is not the same as the definition of Household Income that is used to calculate eligibility for the Net Premium Tax Credit on Form 8962.
For filing threshold exemption purposes, household income is considered to be the taxpayer’s modified adjusted gross income (MAGI), which is their adjusted gross income (AGI) plus certain other items from the tax return. If the taxpayer files a Form 1040, they can figure their MAGI by adding to their AGI any amounts reported on Form 1040 for tax exempt interest. If the taxpayer claimed the foreign earned income exclusion, housing exclusion, or housing deduction, the taxpayer also adds those amounts from Form 2555. The taxpayer must also include in household income the MAGI of each individual in the taxpayer’s tax household whom the taxpayer claims as a dependent but only if that individual is required to file a tax return because his or her income meets the income tax return filing threshold. If the dependent claimed on the taxpayer’s return did not have to file a tax return, then their income is not included in the household income calculation for the purposes of a filing threshold exemption on Form 8965.
To enter Household Income from the Main Menu of the Tax Return (Form 1040) select:
- Other Taxes Menu
- Health Coverage Exemptions/Responsibility Payment (8965)
- Part III –Shared Responsibility Payment
- Household Income
Select the applicable income items from the dependent’s tax return and enter the amounts. The income items from the taxpayer’s return (tax exempt interest, Form 2555 items) will automatically be pulled to the Household Income Menu and the Household Income will be calculated by the program.
If the taxpayer is eligible for a Household Income filing threshold exemption, the program will automatically mark the return as exempt from the Shared Responsibility Payment and everyone on the return will be exempt from any responsibility payment or penalty.
Gross Income Below Filing Threshold
In Keystone Tax Solutions Pro for 2015, if the household income exceeds the filing threshold amounts, the taxpayer may still claim a filing threshold exemption if their AGI on the tax return is below the filing threshold for their filing status. The 2015 program does not automatically mark the return as eligible for the AGI filing threshold exemption, but if the taxpayer whose gross income is less than the filing threshold has chosen to file a tax return they may elect the filing threshold exemption.
To claim the AGI Filing Exemption in 2015, from the Main Menu of the Tax Return (Form 1040) select:
- Other Taxes Menu
- Health Coverage Exemptions/Responsibility Payment (8965)
- Gross Income Below Filing Threshold Hardship Exemption
Select Yes to the question that you are claiming the gross income filing threshold hardship election.
In Keystone Tax Solutions Pro for 2016 and subsequent years, the program calculates the filing threshold and indicates whether or not the return qualifies for either the AGI or Household Income filing threshold here:
- Other Taxes Menu
- Household or Gross Income Below Filing Threshold
This line is for informational purposes, and will indicate either Household, Gross Income, Both, or nothing. If nothing, the return doesn’t qualify for the exemption.
NOTE: This is a guide on entering Household Income and the Filing Threshold Coverage Exemptions into the Keystone Tax Solutions Pro program. This is not intended as tax advice.
Additional Information:
Publication 5187 Affordable Care Act: What You and Your Family Need to Know
Individual Shared Responsibility Provision – Reporting and Calculating the Payment