Line 38 of Form 1040A consists of a check box and a blank line preceded by “Health care: individual responsibility … Full-year coverage.” This line was added to 2017’s Form 1040A and you’ll see it again in 2018. It’s for reporting health coverage or entering individual shared responsibility payments, also known as penalties for not having coverage.
The federal government requires everyone to have health insurance that meets minimum coverage requirements as determined by the Affordable Care Act. Generally this means that your insurance plan has to include a comprehensive set of benefits and cover at least 60 percent of your medical costs.
Line 38 of IRS Form 1040A is specifically debated to qualifying healthcare coverage. If you have had qualifying health care coverage throughout the year, you can check this box.
Line 38 1040A Instructions
Most people who have health insurance have qualifying coverage, also know as minimum essential coverage. Most health insurance provided by employers and government plans like Medicare, Medicaid and veterans and active duty service members' coverage meets the definition. Additionally, coverage purchased through Marketplace and directly from an insurance company usually meet the criteria. Marketplace is federal government-run service that helps you shop for and buy health insurance. You can access it through Healthcare.gov. Many states also have their own marketplaces which are linked in Healthcare.gov.
If you had qualifying coverage for every month during 2017 for yourself, your spouse (if you’re filing jointly) and anyone you claim as a dependent, check the box on line 38 and leave the line next to it blank. Even if you and yours had coverage for one day in a month, it counts for the whole month. If you qualify for an exemption, do not check the box on line 38. Instead, fill out a Form 8965 and send it in with your Form 1040A.
If you do not have qualifying health care coverage and do not qualify for an exemption, you will have to pay a penalty. Do not check the box on line 38 but write the amount you’re paying on the line that’s just to the right of the check box. You must send your penalty payment with your tax return. For more detailed instructions go to the IRS’s About Form 1040A page and click on the Instructions for Form 1040A link.
Find Out If You’re Exempt
You could be exempt from both the requirement to maintain minimum coverage and paying a penalty for three primary reasons: financial hardship, having had less than three consecutive months of a gap in coverage or belonging to a group that is exempt from the requirement such as Indian tribes and some religious groups. However, within these three broad categories, there are many more exemptions. Check the IRS’s website for a complete list.
For some exemptions, you have to fill out an application and mail it to Marketplace in advance. These exemptions are marked “application required” on the IRS’s list. If you’re approved for the exemption, Marketplace will give you an Exemption Certificate Number, which you’ll put on Form 8965.
Whether or not an application is required, if you qualify for an exemption, you’ll have to fill out a Form 8965 and submit it with your tax return. This form is used to report coverage exemptions granted by the Marketplace or to claim a coverage exemption on your own.
If you don’t have health insurance and don’t qualify for an exemption, you’ll pay a penalty. The penalty for not having health insurance is $695 per adult and $347.50 per child up to a maximum of $2,085 per family, or 2.5 percent of the household income, whichever is greater. This applies to returns filed in 2017 for the 2016 tax year and to returns filed in 2018 for the 2017 tax year. The new tax bill eliminates the penalty in 2019, but that could change. So if you don’t have health insurance during 2018, you may still have to pay a penalty. Furthermore, the dollar amounts could change because they’re adjusted for inflation.
Changes for 2018
One change for the 2018 tax year is the addition of several new exemptions. Under the new rules, you can apply for a hardship exemption if you live in an area that has no Marketplace plans or where just one insurer is selling them. You can also apply for an exemption if you can’t find an affordable plan that doesn't cover abortion or if you’ve experienced "personal circumstances" that make it difficult to buy coverage. For example, not being able to find a plan in your area that covers the specialty care that you need.
The first new exemption isn't relevant for 2018 because there have been no counties lacking insurers since the Affordable Care Act's Marketplace opened. However, there are counties that have just one Marketplace insurer, so the second new exemption could apply to you. The exemption for not having access to a plan that doesn’t cover abortion is not likely to apply to many people because most plans don’t cover abortion in the first place.
These exemptions are retroactive to the 2016 tax year. If you’ve already filed for 2016 and 2017, first apply to Marketplace for the exemption, then file an amended tax return. You’ll particularly want to do this if you paid a penalty for 2016 and/or 2017 because you may have a refund coming.
Health Coverage for 2017
The 2017 tax forms were the first ones that required taxpayers to provide information about their health care. In fact, beginning with returns filed in 2018 for 2017, the IRS won’t process individual tax returns if you don’t fill out line 38. For a complete list of IRS health insurance forms, visit the IRS’s website.
In 2017, hardships that could qualify you for an exemption include being homeless or facing eviction or foreclosure, receiving a shut-off notice from a utility company and being a victim of domestic violence. Additional exemptions include having experienced property damage due to a natural disaster, the death of a close family member and having medical expenses you cannot pay. For a complete list go to HealthCare.gov.
- HealthCare.gov: Health Insurance Marketplace
- HealthCare.gov: Health coverage exemptions, forms & how to apply
- HealthCare.gov: No health insurance? How much you'll pay
- IRS.gov: About Form 8965, Health Coverage Exemptions
- IRS.gov: Reporting Health Coverage on IRS Tax Forms
- Internal Revenue Service. "Form 1095-B: Health Coverage," Page 1. Accessed May 31, 2020.
- Internal Revenue Service. "About Form 1095-B, Health Coverage." Accessed Jan. 17, 2020.
- Internal Revenue Service. "Instructions for Forms 1094-B and 1095-B (2019)." Accessed May 31, 2020.
- Internal Revenue Service. "Form 1095-B: What You Need to Do with this Form." Accessed Jan. 17, 2020.
- Congress.gov. "H.R.3590 - Patient Protection and Affordable Care Act." Accessed Jan. 17, 2020.
- Healthcare.gov. "Exemptions from the Requirement to Have Health Insurance." Accessed Jan. 17, 2020.
- Internal Revenue Service. "About Form 1095-A, Health Insurance Marketplace Statement." Accessed Jan. 17, 2020.
- Internal Revenue Service. "About Form 1095-C, Employer-Provided Health Insurance Offer and Coverage." Accessed Jan. 17, 2020.
- Internal Revenue Service. "Instructions for Forms 1094-B and 1095-B (2019)." Accessed Jan. 17, 2020.
- Internal Revenue Service. "Form 1095-B: Health Coverage," Pages 1-3. Accessed Feb. 3 2020.
LeDona Withaar has over 20 years’ experience as a securities industry professional and finance manager. She was an auditor for the National Association of Securities Dealers, a compliance manager for UNX, Inc. and a securities compliance specialist at Capital Group. She has an MBA from Simmons College in Boston, Massachusetts and a BA from Mills College in Oakland, California. She has done volunteer work in corporate development for nonprofit organizations such as the Boston Symphony Orchestra. She currently owns and operates her own small business in addition to writing for business and financial publications such as Budgeting the Nest, Zacks and PocketSense.