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 claiming exemptions or entering the months where a person on the tax return has coverage does not apply for tax years after 2018.
Form 8965 – Health Coverage Exemptions was retired starting with tax year 2019. The information that follows is for tax years prior to 2019.
A common scenario that occurs when addressing the Shared Responsibility Payment is when one or more individual on the tax return (Taxpayer, Spouse, or Dependent) has a Coverage Exemption or minimum essential health coverage (such as Medicaid or enrollment in a state run Children Health Insurance Program), but not everyone in the household has minimum essential coverage. When this occurs the Taxpayer is required to complete Form 8965 and account for the health care coverage or coverage exemptions for each person on the tax return. Since the Shared Responsibility Payment is calculated by each month that each person on the tax return lacks minimum essential coverage or a coverage exemption, each person on the return has to be addressed.
To account for the minimum essential coverage and/or Coverage Exemptions for each individual on the tax return from the Main Menu of the Tax Return, (Form 1040):
- Select, ‘Other Taxes Menu’
- Select, ‘Health Coverage Exemptions/Responsibility Payment (8965)’
- Select, ‘Shared Responsibility Payment’
- Select, ‘Edit Shared Responsibility Payment Individuals’
- Double-click on the individual that has to be edited
- Select, ‘Months With No Coverage or No Exemption’ and select each month that the individual being edited had no coverage or no exemption. If the individual had no coverage or no exemptions for the entire year, select the ‘Check All’ option.
This could result in a Responsibility Payment being calculated for this individual for any month that they lacked coverage or an exemption. If the individual had coverage or an exemption for the entire year, you should select the ‘Uncheck All’ option. If the individual had minimum essential coverage or a Coverage Exemption for part of a year, only those months where the individual had coverage or an exemption should be un-checked.
This process should be repeated until you account for each person on the tax return.
NOTE: This is a guide on entering minimum essential health coverage for certain individuals on a tax return, but not everyone on the return into the Keystone Tax Solutions Pro program. This is not intended as tax advice.
Additional Information: