As you know, individuals must have health coverage or pay a tax penalty, known as the “shared responsibility payment.” American Indians and Alaska Natives (AIAN) may qualify for an exemption to this tax penalty. Qualified AIAN individuals are members of federally recognized tribes (including Alaska Native shareholders) and/or AIAN individuals who are eligible to receive services from an Indian Health Service, tribal, or Urban Indian health program.
Qualified AIAN can claim this two ways, by self-attestation through the tax filing process, or by completing an exemption application and attaining an Exemption Certificate Number.
1. Self-Attestation: Qualified AIAN can claim an exemption from the shared responsibility payment through the tax filing process by filling out Form 8965, Health Coverage Exemptions and attaching this form to their Form 1040, Form 1040A, or Form 1040EZ. This form and respective instruction form are attached to this email.
Although documentation is not required when initially claiming the exemption, qualified AIAN must keep documents showing tribal membership or eligibility for services from the Indian Health Service, a tribal health care provider, or an urban Indian health care provider on file in the case that they are audited.
2. Exemption Application: Qualified AIAN can claim an exemption from the shared responsibility payment by filling out an Application for Exemption for American Indians and Alaska Natives. This application requires documents showing tribal membership or eligibility for services from the Indian Health Service, a tribal health care provider, or an urban Indian health care provider.
After filling out the exemption application, Qualified AIAN will receive an Exemption Certificate Number (ECN). Once an individual receives an Exemption Certificate Number, there is no need to re-apply, but they will need the ECN each time they file their taxes. Access the Instructions to Help You Complete an Exemption Application for more information.
Prior to Health and Human Services Secretary Burwell’s announcement on September 18, 2014, both members of federally recognized tribes and individuals eligible to receive services from Indian Health Programs could qualify for exemptions, but only members of a federally recognized tribes could claim an exemption through the federal tax filing process, whereas individuals eligible to receive services from Indian Health Programs were required to obtain this exemption by submitting a paper application for a hardship waiver. Now both can apply through the tax filing process.
Check out our page, Covered California for American Indians, or visit your Indian Health provider to learn more about unique provisions for American Indians and Alaska Natives through Covered California.