Coverage exemptions for American Indians, & Alaska Natives, and others eligible for services from Indian health programs

Through the 2018 plan year, the health care law requires most people to have qualifying health coverage or pay a fee.

Indian health coverage exemption

American Indians and Alaska Natives (AI/ANs) and other people eligible for services through the Indian Health Service, tribal programs, or urban Indian programs (like the spouse or child of an eligible Indian) don't have to pay the fee for not having health coverage. This is called having an Indian health coverage exemption.

No penalty for the 2019 plan year and later

  • Starting with the 2019 plan year (for which you’ll file taxes in April 2020), the fee no longer applies for anybody, regardless of Indian status. (The fee is sometimes called the “Shared Responsibility Payment” or “mandate.”)
  • If you don’t have coverage during 2019, you don’t need an exemption in order to avoid the penalty.

Claiming the Indian exemption for 2018

Members of federally recognized tribes, ANCSA Corporation shareholders, and people who are otherwise eligible for services through an Indian health care provider can claim the Indian exemption when filing a federal income tax return.

  1. Download IRS Form 8965—Health Coverage Exemptions (PDF, 73 KB) and instructions (PDF, 481 KB).
  2. On Part III of the form, enter the code for the Indian Exemption (Code E) in column “c” and check the box in column “d” for “Full Year.” You don't need to provide additional documentation.
  3. Be sure to include your completed Form 8965 when you file your tax return.

You can still enroll in health coverage, even if you have an exemption

Having an exemption from the shared responsibility fee doesn’t prevent you from enrolling in a Marketplace health plan, Medicaid, or CHIP. These coverage options are still available to you. You might qualify for certain protections under Medicaid or CHIP, or for lower costs on monthly premiums and no out-of-pocket costs on private insurance through the Marketplace.

More answers

I get my health services from an Indian Health Services (IHS) provider. Do I need to have a health coverage exemption to avoid paying a tax penalty?

Yes. You’ll have to file for an exemption if the only health coverage you have is through the Indian Health Services (IHS) and you don’t have other insurance, such as through your employer or through a federal health program such as the Marketplace, Medicare, Medicaid or the Department of Veterans Affairs (VA).

But because you’re eligible for services from the IHS, a tribal member, or Alaska Native shareholder, you can file for an Indian exemption and avoid paying the penalty.
Do I need to submit IRS Form 8965 to claim an exemption every year?

Yes. You’ll need to submit this form every year you file a federal income tax return and want an exemption.

If you don’t have an Exemption Certificate Number (ECN), you’ll enter code “E” in column “c” of Part III of Form 8965 with every year’s tax return.
If you have an ECN, you’ll enter it for you and each of your family members in Part I of the form.
Note: You don’t need to get a new ECN each year. You can put the same ECN on the form each year.
Do I still need to submit a paper exemption application to the Marketplace if I claimed my tribal exemption when I filed my federal income taxes using Form 8965?

No. You don’t have to submit a Marketplace paper exemption application, or have an ECN, if you claim this exemption on IRS Form 8965 when you file your federal income taxes each year.