Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

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Pioneer
Posts: 1
Registered: ‎01-27-2018

Unaffordable insurance exemption for unemployed spouse?

[ Edited ]
Hello. My spouse and I got married November 30, 2017. Spouse was unemployed all of 2017, had zero income, and had no health insurance. I was employed all of 2017 and covered under my employer sponsored health insurance. We are planning on filing as married filing jointly. We're trying to determine if spouse would qualify for the "unaffordable coverage" exemption (Not the marketplace exemption). I realize the IRS considers us married for all of 2017 even though we were only married 1 month. So can we use the lowest cost premium we were quoted to add my spouse to my employer insurance plan in order to determine it was too costly for us to afford based on the household adjusted income (my income essentially, since spouse had none)? Even though spouse was single for most of the year? I'm so confused. Thanks for your help.
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Associate (Pioneer)
Posts: 107
Registered: ‎01-08-2018

Re: Unaffordable insurance exemption for unemployed spouse?

Hello Cheeburger,

Welcome to the H&R Block Community.

If you are referring to the mandate exemptions to waive off the shared responsibility payment, then according to the information you've provided, you are probably referring to the following exemption as shown on the instructions for Form 8965:

"Coverage considered unaffordable—The required contribution is more than 8.16% of your household income."

If this is the case, then according to Form 8965 instructions, "Coverage considered unaffordable (code “A”). You can claim a coverage exemption for yourself or another member of your tax household for any month in which:
• The individual is eligible for coverage under an employer plan and that coverage is considered unaffordable, or
• The individual isn’t eligible for coverage under an employer plan and the coverage available for that individual through the Marketplace is considered unaffordable.

Coverage is considered unaffordable if the individual's required contribution is more than 8.16% of household income."

Also, "if you or another member of your tax household isn't eligible for coverage through his or her own employer (if any) but is eligible for family coverage under a plan offered by your employer or your spouse's employer if filing jointly (for example, a child who is eligible to enroll in family coverage offered by your employer), the individual's required contribution is the amount the employee would pay for the lowest cost family coverage that would cover everyone in the tax household."

In other words, as long your documentation shows that the employer health insurance plan's lowest cost to cover you and the spouse is more than 8.16% of the household income, then you can select the "coverage considered unaffordable" exemption in the tax program for the months of having no health coverage for the spouse. When selecting this specific exemption for the spouse on Form 8965, a code "A" will appear under column “(C) Exemption Type" and then either column “(d) Full Year” is marked off or columns (e) through (p) are marked off for the number of months of no health care coverage in applying the exemption.

For more information about the mandate exemptions, go to the following links for the Form 8965 and the instructions:
- Form 8965: https://www.irs.gov/pub/irs-pdf/f8965.pdf
- Form 8965 Instructions: https://www.irs.gov/pub/irs-pdf/i8965.pdf

If you have any other questions, I'll be glad to help.

Lawrence,
Tax Research Specialist