Exemptions from the Tax Penalty Insurance agents and kynectors 3/3/15

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1 Exemptions from the Tax Penalty Insurance agents and kynectors 3/3/15 Can kynect give me an exemption from the tax penalty? kynect cannot grant exemptions from the tax penalty. Exemptions are granted by the federal marketplace (healthcare.gov) or by the IRS. You can apply for some exemptions with the IRS when you file your taxes by filling out IRS Form How do I get an exemption? It depends on how long and when you were without coverage. If your health coverage started on or before May 1, 2014, you will enter a special exemption code on IRS Form If you were without coverage for less than three consecutive months at any time during 2014, you will enter a special exemption code on IRS Form If your enrollment was held up for many months due to technical issues, you will need to apply for an exemption from the federal marketplace (healthcare.gov) using a special application form. 1. If you experienced technical issues but had health coverage that started on or before May 1, 2014: You will enter an exemption code on IRS Form 8965 when you file your taxes. This exemption is called Coverage Gap Prior to Obtaining MEC by May 1, It is a special exemption only available for 2014 tax returns. It is for people who enrolled in a health insurance plan, Medicaid, KCHIP or other coverage considered to be Minimum Essential Coverage (MEC) that had a start date (or effective date) on or before May 1, This exemption is for any months from January through April 2014 that you were uninsured. This exemption can be claimed on Form 8965 when you file your taxes. kynect does not need to provide any information for you to get this exemption. 2. If you went without coverage for less than three consecutive months during the year (for any reason, not just technical): You will enter an exemption code on IRS Form 8965 when you file your taxes. This exemption is called Short Coverage Gap. This exemption can be claimed on Form 8965 when you file your taxes. kynect does not need to provide any information for you to get this exemption. 3. If you went without coverage because you could not enroll until later in the year (after May 1, 2014) due to technical and enrollment issues through kynect: You may qualify for a hardship exemption if you were unable to enroll due to technical issues long after May 1, This exemption comes from the federal marketplace (healthcare.gov), not the IRS. You will need to apply for this type of hardship exemption. The form to use is the Application for Exemption from the Shared Responsibility Payment for Individuals who Experience Hardships. You can find it at kynect can review your case and provide documentation (if appropriate) that you can send to the federal marketplace when you send your request. kynect does not grant exemptions; all requests need to be sent to the federal marketplace. What exemption code do I use? We are unable to give tax advice. You will need to read the IRS 2014 Instructions for Form 8965 or talk to a tax professional for more information. There are many tax professionals available to you free of

2 charge around the state. To find out, go to assistance.ky.gov/freetaxhelp/index.htm or call Community Action Kentucky at You can also contact the IRS by phone at or go online to IRS.gov to download the instructions and the form. Can you tell me how to fill out Form 8965 (or any tax form)? We are unable to give tax advice. You will need to read the IRS 2014 Instructions for Form 8965 or talk to a tax professional for more information. There are many available to you free of charge around the state. To find out, go to assistance.ky.gov/freetaxhelp/index.htm or call Community Action Kentucky at You can also contact the IRS by phone at or go online to IRS.gov to download the instructions and the form. How do I obtain a hardship exemption if I was unable to enroll due to technical issues with kynect after May 1, 2014? If you experienced technical issues that prevented you from enrolling beyond May 1, 2014, you may be able to seek a hardship exemption from the federal marketplace. To find out more, go to Where can I find the federal marketplace exemption form? Visit healthcare.gov/exemptions to find the correct exemption application. The correct form is the Application for Exemption from the Shared Responsibility Payment for Individuals who Experience Hardships. Can kynect give me documentation to prove I couldn t get enrolled because of technical difficulties? If you could not enroll until after May 1, 2014 because of technical difficulties, kynect may be able to provide you with documentation. At your request, we will review your case to verify that you were unable to enroll in coverage due to a technical issue. Once the case is reviewed, kynect will send out a letter either documenting or denying your hardship. With the documentation letter, kynect will send you an Application for Exemption from the Shared Responsibility Payment for Individuals who Experience Hardships form. Will applying for a hardship exemption stop me from doing my taxes? Applying for the hardship exemption doesn t have to delay filing your taxes. You can apply for an exemption through the federal marketplace by writing Pending in the space for Exemption Certificate Number (Part 1, Column c on Form 8965). Attach completed Form 8965 to Form You write Pending because you are in the process of obtaining a Marketplace Exemption. If the exemption is approved, the federal marketplace will notify the IRS. You will not need to change or refile your tax return. If the exemption is not approved, the federal marketplace will notify you of the denial. You can then apply for an alternative exemption or refile your tax return to include any penalty that may apply because the exemption was denied. Which hardship number (reason) do I use? The Hardship Number to use when completing Application for Exemption from the Shared Responsibility Payment for Individuals who Experience Hardships is is for types of hardships that are not specifically listed. On Page 3, Line 8, on the application, check Item 14 which reads: You experienced another hardship. If you didn t experience one of the 13 hardships listed above, there s a limited number of other hardships you may qualify for. In the detail box below item

3 14, a taxpayer can enter Experienced technical difficulties that prevented completing enrollment in healthcare coverage to describe how they were unable to complete enrollment in healthcare coverage. Where do I send my hardship exemption request? Health Insurance Marketplace Exemption Processing 465 Industrial Blvd. London, KY What type of documentation will kynect provide? If in its review, kynect finds that your case was held up by technical difficulties and that you enrolled in coverage as soon as you could, kynect will send you a letter. The letter will state the months that you were unable to get coverage due to technical issues. kynect will also send a letter if your case is found not to have been held up by technical issues. Can you send me IRS Form 8965? kynect cannot send you the form. You can find it at IRS.gov or by calling the IRS at Can you send me the Application for Exemption from the Shared Responsibility Payment for Individuals who Experience Hardships form? kynect cannot send you the form unless it is part of a documentation packet. You can find it at Example of Form 8965 to show where PENDING should be written:

4 Example of Form 8965 where Exemption Code is entered: Example of Application for Exemption from the Shared Responsibility Payment for Individuals who Experience Hardships to show reason 14:

5 DRAFT kynect letter verifying hardship documentation: <Date> <Address> <City, State Zip> Dear < >, Case Number: < > This letter is in regards to your request for documentation that your enrollment in health coverage was delayed by technical issues in the kynect system. Individuals who were unable to enroll by May 1, 2014 due to technical issues may qualify for a hardship exemption from the Shared Responsibility Payment or tax penalty. The Kentucky Office of Health Benefit and Health Information Exchange (KOHBHIE) which administers kynect cannot grant exemptions. The exemption you are seeking must be granted by the Federal Marketplace, not the IRS or KOHBHIE. To apply for the exemption, will need to fill out the form Application for Exemption from the Shared Responsibility Payment for Individuals who Experience Hardships. It is available at We have attached the form for your convenience. KOHBHIE has verified that your case pended for such a period that you were unable to enroll in a health coverage plan until after May 1, This letter will serve as documentation if you request an exemption from the Shared Responsibility Payment or tax penalty. On your application form to the Federal Marketplace, you will enter: DATE HARDSHIP STARTED <MM/DD/YYYY> DATE HARDSHIP ENDED <MM/DD/YYYY> You do not need to delay filing your 2014 taxes if you apply for the exemption through the Federal Marketplace. When you file your taxes, you need to fill out IRS Form Write Pending in the space for Exemption Certificate Number (Part 1, Column c on Form 8965). Attach completed your Form 8965 to your Form You write Pending because you are in the process of obtaining a Marketplace Exemption.

6 If the exemption is approved by the Federal Marketplace, the Federal Marketplace will notify the IRS. You will not need to change or refile your tax return. If the exemption is not approved, the federal marketplace will notify you of the denial. You can then apply for an alternative exemption or refile your tax return to include any penalty that may apply because the exemption was denied. If you have any questions about the exemption from the Shared Responsibility Payment, you must contact the Federal Marketplace. You can call (TTY: ) or go online to Thank you, Carrie Banahan Executive Director Kentucky Health Benefit and Health Information Exchange

7 DRAFT kynect letter denying hardship documentation: <Date> <Address> <City, State Zip> Dear < >, Case Number: < > This letter is in regards to your request for documentation that your enrollment in health coverage was delayed by technical issues in the kynect system. The Kentucky Office of Health Benefit and Health Information Exchange (KOHBHIE) is unable to verify that your case pended for such a period that prohibited you from being able to enroll in a health coverage plan until after May 1, There is no documentation supporting the exemption you are seeking. KOHBHIE, which administers kynect, does not grant exemptions. Exemptions from the Shared Responsibility Payment are granted by the Federal Marketplace and/or the IRS. If you have any questions about exemptions from the Shared Responsibility Payment, you must contact the Federal Marketplace. You can call (TTY: ) or go online to Thank you, Carrie Banahan Executive Director Kentucky Health Benefit and Health Information Exchange