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 Short Term Coverage Gaps Exemptions do not apply for tax years after 2018.
Form 8962 – Health Coverage Exemptions was retired starting with tax year 2019. The information that follows is for tax years prior to 2019.
Short coverage gap (code “B”). A taxpayer generally can claim a coverage exemption for the taxpayer or another member of the tax household for each month of a gap in coverage of less than 3 consecutive months. If an individual had more than one short coverage gap during the year, the individual is exempt only for the month(s) in the first gap. If an individual had a gap of 3 months or more, the individual isn’t exempt for any of those months. For example, if an individual had coverage for every month in the year except February and March, the individual is exempt for those 2 months. However, if an individual had coverage for every month in the year except February, March, and April, the individual isn’t exempt for any of those months.
Example—multiple gaps in coverage. The taxpayer had coverage for every month except February, March, October, and November. The taxpayer is eligible for the short coverage gap exemption only for February and March.
Example—gaps in coverage for partial months. The taxpayer has minimum essential coverage except for the period April 5 through July 25. An individual is treated as having coverage for any month in which he or she has coverage for at least 1 day of the month. As a result, the taxpayer has minimum essential coverage in April and July and is eligible for the short coverage gap exemption for May and June.
Continuous coverage gap straddles more than one taxable year. If the taxpayer does not have minimum essential coverage for a continuous period that begins in one taxable year and ends in the next, for purposes of applying the short coverage gap rules to the first taxable year, the months in the second taxable year included in the continuous period are not counted. For purposes of applying the short coverage gap rules to the second year, the months in the first taxable year are counted.
To enter a Short Term Coverage Exemption from the Main Menu of the Tax Return (Form 1040) select:
- Other Taxes Menu
- Health Coverage Exemptions/Responsibility Payment (8965)
- Part III –Coverage Exemptions
- Select ‘New’ and double-click on the individual that has the exemption.
- Select ‘Exemption Type and then select Short coverage gap (code “B”) from the list provided and select enter.
- Select ‘Months Claiming Exemption’ and select the month(s) that Short Term Coverage Exemption applies.
This process should be repeated for each person on the tax return who is claiming a Short Term Coverage Exemption.
NOTE: This is a guide on entering a Short Term Coverage Exemption into the TaxSlayer Pro program. This is not intended as tax advice.
Additional Information:
Instructions for Form 8965
Affordable Care Act: What You and Your Family Need to Know </span”>