n-14-76.pdf

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Individual Shared Responsibility Payment Hardship Exemptions that May Be Claimed
on a Federal Income Tax Return Without Obtaining a Hardship Exemption Certification
from the Marketplace

Notice 2014-76

PURPOSE
This notice identifies the hardship exemptions from the individual shared
responsibility payment under § 5000A of the Internal Revenue Code that a taxpayer
may claim on a Federal income tax return without obtaining a hardship exemption
certification from the Health Insurance Marketplace (Marketplace).
BACKGROUND
For each month beginning after December 31, 2013, § 5000A requires
individuals to have minimum essential health coverage for themselves and any
nonexempt family member whom the taxpayer may claim as a dependent, qualify for an
exemption, or include an individual shared responsibility payment with their Federal
income tax return.
Section 5000A(e)(5) and § 1.5000A-3(h) of the Income Tax Regulations, as
finalized concurrently with this notice, provide that, in general, an individual is exempt
from § 5000A for a month if he or she has in effect a hardship exemption certification
issued by the Marketplace certifying that the individual has suffered a hardship (as that
term is defined in 45 CFR 155.605(g)) affecting the individual’s capability to obtain
minimum essential coverage in that month. Section 1.5000A-3(h)(3), as finalized

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concurrently with the issuance of this notice, provides that an individual may claim a
hardship exemption on the individual’s Federal income tax return without obtaining a
hardship exemption certification from the Marketplace if the individual is eligible for a
hardship exemption described in guidance released by the Department of Health and
Human Services (HHS) and the exemption is allowed pursuant to guidance published
by the Treasury Department and the Internal Revenue Service (IRS). As discussed in
the preamble to the final regulations released concurrently, this notice provides a
complete list of hardship exemptions that may be claimed on a Federal income tax
return without obtaining a hardship exemption certification, rather than listing specific
exemptions in the regulations.
DISCUSSION
In several pieces of published guidance, HHS has identified hardships affecting
an individual’s ability to obtain minimum essential coverage, which, pursuant to
guidance issued by the Treasury Department and the IRS, permits a qualifying
individual to claim a hardship exemption on a Federal income tax return without
obtaining a hardship exemption certification from the Marketplace. This notice
recognizes the following hardships identified by HHS and allows a qualifying individual
(or the taxpayer who may claim a qualifying individual as a dependent) to claim a
hardship exemption on a Federal income tax return without obtaining a hardship
exemption certification from the Marketplace. Individuals seeking a hardship exemption
that is not on this list can apply for an exemption through the Marketplace.
A. Two or more members of a family whose combined cost of employer-
sponsored coverage is considered unaffordable. In 45 CFR 155.605(g)(5), HHS

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provides that an individual is eligible for a hardship exemption if the individual satisfies
the following requirements: (1) the individual's required contribution for self-only
coverage does not exceed the required contribution percentage of household income in
§ 5000A(e)(1)(A), (2) the combined required contribution for self-only coverage for two
or more employed members of the individual’s family exceeds the required contribution
percentage of household income, and (3) the required contribution for family coverage
that the employed members of the individual’s tax household could enroll in through an
employer exceeds the required contribution percentage of household income. An
individual meeting these requirements for any month in a taxable year may claim a
hardship exemption on a Federal income tax return for the taxable year without
obtaining a hardship exemption certification. This hardship exemption was identified
previously by the Treasury Department and the IRS in final regulations published on
August 30, 2013 (TD 9632, 78 FR 53646).
B. Gross income below the applicable return filing threshold. In guidance
released on September 18, 2014, HHS provides that that all individuals with gross
income below their applicable filing threshold (as specified in § 6012(a)(1)) are entitled
to a hardship exemption. See HHS Centers for Medicare & Medicaid Services, Shared
Responsibility Guidance--Filing Threshold Hardship Exemption (Sept. 18, 2014)
(available at www.cms.gov/CCIIO/Resources/Regulations-and-
Guidance/Downloads/Filing-Threshold-Exemption-Guidance-9-18-14.pdf). See also 45
CFR 155.605(g)(3). HHS intends to release additional guidance clarifying that this
hardship exemption applies only to an individual who may not be claimed as a
dependent by another individual. An individual eligible for this hardship exemption who

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files a Federal income tax return may claim a hardship exemption on the return for the
taxable year without obtaining a hardship exemption certification.
C. Individuals who obtained minimum essential coverage during the 2014 open
enrollment period.
1. In guidance released on October 28, 2013, HHS provides that an individual is
eligible for a hardship exemption if the individual enrolled in coverage through the
Marketplace prior to the close of the initial open enrollment period (Mar. 31, 2014). See
HHS Centers for Medicare & Medicaid Services, Shared Responsibility Provision
Question and Answer (Oct. 28, 2013) (available at
www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/enrollment-period-
faq-10-28-2013.pdf). This hardship exemption was identified previously by the Treasury
Department and the IRS in proposed regulations published on January 27, 2014 (REG-
141036-13, 79 FR 4302).
2. In guidance released on March 26, 2014, HHS provides that an individual who
was “in line” to enroll in coverage through the Marketplace on March 31, 2013, will be
treated as having enrolled in coverage by March 31, 2014. For purposes of the March
26, 2014, HHS guidance, the term “in line” refers to individuals for whom HHS had
received paper applications by April 7, 2014, or who tried to enroll during the open
enrollment period but did not complete the process by March 31, 2014. Accordingly,
individuals in that situation are eligible for the hardship exemption described in the HHS
letter of October 28, 2013. See HHS Centers for Medicare & Medicaid Services,
Guidance for Issuers on People “In Line” for the Federally-facilitated Marketplace at the
end of the Initial Open Enrollment Period (Mar. 26, 2014) (available at

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www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/in-line-SEP-3-
26-2014.pdf).
3. In guidance released on May 2, 2014, HHS provides that an individual is
eligible for a hardship exemption if the individual enrolled outside the Marketplace in
minimum essential coverage for 2014 that is effective on or before May 1, 2014. See
HHS Centers for Medicare & Medicaid Services, Special Enrollment Periods and
Hardship Exemptions for Persons Meeting Certain Criteria (May 2, 2014) (available at
www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/SEP-and-
hardship-FAQ-5-1-2014.pdf).
4. An individual meeting the requirements in paragraph C.1, C.2, or C.3 of this
notice may claim a hardship exemption on a Federal income tax return without obtaining
a hardship exemption certification for months in 2014 before the month when the
individual’s coverage became effective.
D. Certain individuals who applied for CHIP coverage during the open
enrollment period for 2014. In guidance released on March 31, 2014, HHS provides
that an individual is eligible for a hardship exemption if the individual applied for
coverage under the Children’s Health Insurance Program (CHIP) during the open
enrollment period for 2014 and was found eligible for CHIP but had a gap in coverage
prior to the effective date of the CHIP coverage. See HHS Centers for Medicare &
Medicaid Services, Shared Responsibility Provision Question and Answer (Mar. 31,
2014) (available at www.cms.gov/CCIIO/Resources/Regulations-and-
Guidance/Downloads/shared-responsibility-FAQ-3-30-2014.pdf). An individual meeting
these requirements may claim a hardship exemption on a Federal income tax return

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without obtaining a hardship exemption certification for months in 2014 before the
month in which the individual’s CHIP coverage became effective.
E. Individuals eligible for services through an Indian Health Care Provider. In
guidance released on September 18, 2014, HHS provides that an individual is eligible
for a hardship exemption if the individual is eligible for services through an Indian health
care provider (as defined in 42 CFR 447.50) or is eligible for services through Indian
Health Service in accordance with 25 U.S.C. 1680c(a), (b), or (d)(3). See HHS Centers
for Medicare & Medicaid Services, Shared Responsibility Guidance--Exemption for
Individuals Eligible for Services through an Indian Health Care Provider (Sept. 18, 2014)
(available at
www.cms.gov/CCIIO/Resources/Fact-Sheets-and-
FAQs/Downloads/guidance-exemption-certain-AIAN.pdf). See also 45 CFR
155.605(g)(6). An individual meeting the requirements described above may claim a
hardship exemption on a Federal income tax return for a month in a taxable year that
includes a day on which the individual is eligible for services through an Indian health
care provider or the Indian Health Service without obtaining a hardship exemption
certification.
F. Certain individuals residing in a state that did not expand Medicaid eligibility
under section 2001(a) of the Affordable Care Act. In guidance released on November
21, 2014, HHS provides that an individual is eligible for a hardship exemption for 2014 if
at any time during 2014 the individual resided in a state that did not expand Medicaid
coverage and the individual’s household income, within the meaning of § 36B, is below
138 percent of the applicable federal poverty level for the individual’s family size. See
HHS Centers for Medicare & Medicaid Services, Guidance on Hardship Exemptions for

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Persons Meeting Certain Criteria (Nov. 21, 2014) (available at www.cms.gov). An
individual meeting the requirements of this hardship exemption may claim an exemption
on a 2014 Federal income tax return without obtaining a hardship exemption
certification.
EFFECTIVE DATE
This notice applies to taxable years beginning after December 31, 2013.
DRAFTING INFORMATION
The principal author of this notice is John B. Lovelace of the Office of Associate
Chief Counsel (Income Tax & Accounting). For further information regarding this notice
contact Mr. Lovelace at (202) 317-7006 (not a toll-free call).