The Individual Shared Responsibility Provision
By: Gary M. DellaPosta, CPA
The individual shared responsibility provision requires that you and each member of your family have qualifying health insurance, a health coverage exemption, or make a payment for any months without coverage or an exemption when you file. If you, your spouse and dependents had health insurance coverage all year, you will indicate this by simply checking a box on your tax return.
In most cases, the shared responsibility payment reduces your refund. If you are not claiming a refund, the payment will increase the amount you owe on your tax return. Here are some basic facts about the individual shared responsibility provision.
What is the individual shared responsibility provision?
The individual shared responsibility provision calls for each individual to have qualifying healthcare coverage--known as minimum essential coverage--for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return.
Who is subject to the individual shared responsibility provision?
The provision applies to individuals of all ages, including children. The adult or married couple who can claim a child or another individual as a dependent for federal income tax purposes is responsible for making the shared responsibility payment if the dependent does not have coverage or an exemption.
How do I get a health coverage exemption?
You can claim most exemptions when you file your tax return. There are certain exemptions that you can obtain only from the Marketplace in advance. You can obtain some exemptions from the Marketplace or by claiming them on your tax return. You will claim or report coverage exemptions on Form 8965, Health Coverage Exemptions, and attach it to Form 1040, Form 1040A, or Form 1040EZ. You can file any of these forms electronically. For any month that you or your dependents do not have coverage or qualify for an exemption, you will have to make a shared responsibility payment
What do I need to do if I am required to make a payment with my tax return?
If you have to make an individual shared responsibility payment, you will need to use the worksheets found in the instructions to Form 8965, Health Coverage Exemptions, to figure the shared responsibility payment amount due. You only make a payment for the months you did not have coverage or qualify for a coverage exemption. If you need assistance, please call.
What happens if I owe an individual shared responsibility payment, but I cannot afford to make the payment when filing my tax return?
The law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment and they routinely work with taxpayers who owe amounts they cannot afford to pay. However, if you owe a shared responsibility payment, the IRS may offset that liability against any tax refund that may be due to you.
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