How To Apply for a Health Insurance Exemption

The Reason You're Eligible for an Exemption Determines How You Apply.

How you apply for a health insurance exemption depends on which type of exemption you qualify for. Image © Westend61/Getty Images

The Affordable Care Act’s individual mandate requires all U.S. residents to have health insurance or pay a penalty called the shared responsibility payment. And although the penalty will be eliminated as of 2019, there is still a penalty if you were uninsured in 2018 (or if you relied on something that wasn't minimum essential coverage, such as a short-term health plan). That penalty will be assessed when people file their 2018 tax returns in early 2019. However, if you get a health insurance exemption, you won’t owe the shared responsibility payment for 2018.

Health insurance exemptions aren’t one-size-fits-all. There are several different reasons for an exemption, each covering a different situation. Some exemptions are good for the entire year, while the duration of other exemptions is determined by the situation that makes you exempt.

You can learn more about the different types of health insurance exemptions and whether or not you might be eligible. A hardship exemption is the type of exemption that most people will be interested in, and it's one that will continue to be useful in 2019 and beyond (after the federal penalty is eliminated), because it allows people age 30 and older the option to purchase catastrophic health insurance. Learn more about it in “ How To Get a Hardship Exemption from Health Insurance.”

Applying for an Exemption

Since health insurance exemptions aren’t one-size-fits-all, how you apply for an exemption isn’t one-size-fits-all, either. How you apply for an exemption depends on the reason you’re exempt.

Some health insurance exemptions are granted automatically; you don’t have to do anything. Some types are claimed after the end of the year, when you file your federal income tax return. Other health insurance exemptions require that you apply for the exemption with your state’s health insurance exchange. The exchange will evaluate your application and either grant or decline your request.

Regardless of whether you get your exemption from the exchange or from the IRS on your tax return, you'll use Form 8965 to claim the exemption when you file your tax return.

And exemptions are significantly more common than penalties. In January 2017, the IRS reported that 6.5 million tax filers had paid the penalty for being uninsured in 2015, while 12.7 million filers had claimed exemptions from the penalty.

Exemptions you can get from EITHER the exchange or on your tax return

In some situations, you have the option of getting your exemption from the exchange, or requesting it when you file your tax return:

  • You're a member of a recognized health care sharing ministry.
  • You're a member of a federally-recognized Indian tribe.
  • You are in prison.
  • You're ineligible for Medicaid solely because your state has opted not to expand Medicaid. There are 18 states that have not yet expanded Medicaid, leaving an estimated 2.2 million people in the Medicaid coverage gap (four states—Maine, Utah, Idaho, and Nebraska—are expected to newly expand Medicaid in 2019 as a result of ballot initiatives passed by voters).

Exemptions Claimed When You File Federal Income Taxes

If you’re exempt from health insurance for any of the following reasons, you can claim your exemption when you file your federal income tax return by April 15 of the following year.

  • You had one short gap in coverage that lasted less than three months (note that if your gap in coverage lasts for three months you'd be on the hook for the penalty for all three months).
  • You’re not residing in the United States legally, or you are a legal non-citizen who's exempt from the health insurance mandate, or you're a US citizen living abroad.
  • You couldn’t find health insurance costing less than 8.05 percent of your household income for 2018 (this exemption is generally available to people who are impacted by the family glitch). If you're eligible for this exemption, consider applying for the exemption through your health insurance exchange even though you’re not required to do so. This particular exemption makes you eligible to purchase a less expensive catastrophic plan through your health insurance exchange even if you’d otherwise be ineligible because you’re over 30 years old.
    • Since you’ll need proof of exemption to qualify for the catastrophic plan, you’ll benefit by getting the exemption through your health insurance exchange early in the year rather than waiting until you file your taxes next year. And this continues to be the case in 2019 and future years. Even though there is no longer a federal penalty for being uninsured as of 2019, catastrophic plan availability for people age 30 and older will still require a hardship exemption, and lack of affordable coverage options counts as a hardship.

Exemptions You Apply for Through a Health Insurance Exchange

If you’re exempt from health insurance due to any of the following reasons, you need to apply for a health insurance exemption through your state’s health insurance exchange.

  • You a member of a recognized religious sect in existence since at least 1950 that objects to health insurance. In practice, this is essentially limited to Amish and Old Order Mennonite congregations.
  • You're applying for a hardship exemption from health insurance.
  • You’re eligible to get health care through an Indian health care provider.
  • Your coverage in the exchange will be considered unaffordable based on your projected income for the coming year. For 2018 coverage, the unaffordable threshold was 8.05 percent of your household income, after accounting for any applicable premium subsidies. For 2019, it's 8.3 percent, and again, this continues to be applicable despite the lack of a federal penalty for 2019, because an affordability exemption is one of the allowable hardships that grants people age 30 and older the option to buy a catastrophic health plan.
  • You're enrolled in coverage through AmeriCorp, VISTA, or NCCC.

Learn how to contact your state’s health insurance exchange from’s Marketplace finder tool. Be prepared to provide the exchange with evidence of your hardship or your eligibility to get health care through an Indian health care provider.

If you're applying based on a religious objection, the criteria are very strict including permanently waiving your Social Security benefits. Review those criteria in "Can You Get a Health Insurance Exemption?"

If you're applying for a hardship exemption and your state uses the federal health insurance exchange at, you can preview the hardship exemption application here.

Automatic Health Insurance Exemptions

The following exemption is automatic. You don’t have to apply for it or claim it on your income tax return, since it applies to people who aren't required to file a return:

  • Your income is so low that you’re not required to file federal income taxes. Known as the filing threshold, the amount of money you can make and still not be required to file taxes changes each year. You can look up the most recent filing threshold in IRS publication 501 .
    • If your income is below the filing threshold, your exemption is automatic. You might still end up filing a tax return in order to get back income tax that was withheld by your employer during the year. In that case, there's a space on Form 8965 for claiming the exemption.

Who Doesn’t Need an Exemption?

You don’t need an exemption if you have health insurance already. That includes individual market insurance, employer-sponsored insurance, coverage provided by the government (VA, Medicare, Medicaid, CHIP, Tricare), and various other types of coverage.

There are some folks that the federal government treats like they’ve met the requirement to have health insurance even if they don’t have health insurance. These folks don’t need to apply for an exemption from health insurance; they won’t have to pay the shared responsibility payment, either. This applies to you if:

  • You’re a resident of Puerto Rico, the US Virgin Islands, American Samoa, Guam, or the Northern Mariana Islands. For this to apply, you must have a closer connection to the U.S. possession where you claim residency than you do to the United States itself or a foreign country.
  • You live outside the United States for at least 330 days of the year and you have a tax home outside of the U.S. (if you still file your tax returns with the U.S., despite living abroad for at least 330 days per year, you'll claim the exemption from the penalty on your U.S. tax return).

States That Have Their Own Individual Mandate Penalty

After GOP lawmakers passed a tax bill in late 2017 that included the eventual repeal of the ACA's individual mandate penalty, several states began considering the idea of implementing their own mandates and penalties. Massachusetts already had one that predates the ACA. New Jersey and the District of Columbia adopted mandates and penalties that are applicable as of 2019, and Vermont's will be applicable as of 2020.

All of them have an exemptions process that is very similar to the ACA's exemption process, although the specifics vary by state. If you live in an area that still has an individual mandate penalty in 2019 and beyond and you think you might be eligible for an exemption, you'll want to reach out to the state tax department to make sure you understand the details and the process for claiming an exemption.

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