# IRS Form 1040, Line 61: Health Care coverage



## xali

Hello,
Instructions for IRS Form 1040, Line 61 (Health Care: Individual responsibility) say to check the box "if you had qualifying health care coverage (called minimum essential coverage) for every month of 2014." It does not mention what to do if you lived abroad. I lived in Spain the whole year and, of course, I had coverage. I'd like to hear what more experienced expats are doing. Is it reasonable to check the box if you had coverage abroad or do you need to file an exemption? Thanks! :juggle:


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## xali

I think it may be safe to check the box (minimum essential coverage) on line 61, but it is kind of confusing. I'm not sure. As directed by form 1040 instructions, I read instructions for 8965 form (Health Coverage Exemptions) and it seemed to me that everyone living abroad had to file for exemption (exemption code C for citizens living abroad at least 330 full days in a 12-month period). That's what I got from the instructions. But then I read on the IRS website that "U.S. citizens who are residents of a foreign country for an entire year, and residents of U.S. territories, are considered to have minimum essential coverage for the year." The Individual Shared Responsibility Provision
This is further explained in a questions and answers page.
Questions and Answers on the Individual Shared Responsibility Provision
"12. Are US citizens living abroad subject to the individual shared responsibility provision?
Yes. However, U.S. citizens who are not physically present in the United States for at least 330 full days within a 12-month period are treated as having minimum essential coverage for that 12-month period. In addition, U.S. citizens who are bona fide residents of a foreign country (or countries) for an entire taxable year are treated as having minimum essential coverage for that year. In general, these are individuals who qualify for a foreign earned income exclusion under section 911 of the Internal Revenue Code. Individuals may qualify for this rule even if they cannot use the exclusion for all of their foreign earned income because, for example, they are employees of the United States. See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for further information on the foreign earned income exclusion. Individuals who qualify for this rule should file Form 8965, Health Coverage Exemptions, with their federal income tax returns."
Does this mean that, if you lived abroad the entire year, you check the box on line 61 and do not file the exemption? This seems in contradiction with what it's said in form 8965 instructions about the Types of Coverage Exemptions, which include citizens living abroad for at least 330 days. If you do have minimum essential coverage you don't need to file for exemption, according to 1040 instructions. Citizens living abroad are considered to have minimum essential coverage. So why do exemption instructions include citizens living abroad? What do you all think? Check the box on line 61 or file form 8965?


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## BBCWatcher

If there's a conflict, always give the actual form instructions preference over something you find on a random Web site, unless it's an actual regulation or law.

My current view, for what it's worth, is that (most) overseas residents can file Form 8965 and use reason C. Some overseas residents may be able to check the box on line 61 and not submit Form 8965, but not most.

Yes, this is different than what was expected, but the existence of reason C means that's how the IRS wrote the instructions and forms and how it wants things done. So if you're an "ordinary" full year FEIE-qualified (whether you take the FEIE or not) overseas resident, use Form 8965 and reason C. If you were enrolled in a U.S. carrier's PPACA-compliant plan, as some overseas residents are through their U.S. employer (in particular), then you'd likely be able to check box 61 and stop there.


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## makaloco

The way I read it, the box on Form 1040 applies to "minimum essential coverage" **for the US**, according to ACA definitions. I live full-time in Mexico and will check the box only because I have Medicare. Otherwise, I'd leave the box unchecked and claim Coverage Exemption C using Form 8539. My coverage in Mexico is irrelevant, because that's outside the US healthcare system.


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## BBCWatcher

It's actually a bit more complicated than that.

In my view you're not doing anything wrong if you're eligible to take reason C and you file that way even though you're also eligible to check the box and stop.

Keep in mind that U.S. carriers start to report coverage (under your SSN) to the IRS, so it's possible the IRS could ask you for more information if you check box 61 and they aren't getting a matching coverage report. That'd be a minor reason why you might favor taking reason C if you have any doubt at all about whether you had MEC (per the IRS's/HHS's definition) for the entire tax year.

Yes, I know, to repeat this is a bit different than what was advertised. But IRS forms and instructions are often like that. You can't quite take the initial concept at face value. You have to wait for the paperwork.


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## Bevdeforges

The IRS says on their website that if you meet either the bona fide resident test or the physical presence test (regardless of whether you actually take the FEIE or not) you are "deemed" to have MEC and should just check the box on line 61.

Am just on my way out the door, so can't find the precise page on the IRS site - but it is there. (Worst case - check the IRS pages on the website for the US Consulate in Paris. That's where I first saw it.)
Cheers,
Bev


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## BBCWatcher

Except the form instructions don't say that. They say quite the opposite, otherwise reason C shouldn't exist. Xali makes a good observation.

On edit: And this IRS Web site says to use Form 8965 (see Q12). As I said, the _mechanics_ of how to file are per IRS form instructions, and they're clear enough. You may be "deemed" to have MEC, but the IRS doesn't just want you checking line 61. Yes, this is a last minute surprise but "no big deal."


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## Bevdeforges

OK, and this is the document referenced on the Paris Consulate IRS office website: Federal Benefits and Obligations



> However, U.S. citizens or residents living abroad for at least 330 days within a 12 month period are treated as having MEC during those 12 months and thus will not owe a shared responsibility payment for any of those 12 months. Also, U.S. citizens who qualify as a bona fide resident of a foreign country for an entire taxable year are treated as having MEC for that year.


I still say, just tick the box saying you have appropriate coverage. (Particularly if you're filing the FEIE.) Interestingly enough, publication 54 doesn't have anything in there about the ACA and line 61 or 62, whichever it is. Evidently, the IRS (and overseas IRS office) sites have only just recently changed. But they have been publicizing for months now the idea that you just have to check yes for "are you covered?" Something tells me they aren't going to be able to crack down on this too hard this year. 
Cheers,
Bev


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## FFMralph

I don't think line 61 is to be checked.
Form 8965 should show a carryover to Line 61 on Form 1040 of $0.00.

I found this:

*The Individual Shared Responsibility Provision*

*Reporting Coverage, Exemptions, and Payments*

You will need to report minimum essential coverage, report or claim a coverage exemption, or make an individual shared responsibility payment when you file your 2014 federal income tax return in 2015.

If you and your dependents all *had minimum essential coverage *for each month of the tax year, you will indicate this on your 2014 tax return by *simply checking a box on Form 1040*, 1040A or 1040EZ; no further action is required.

If you *obtained a coverage exemption* from the Marketplace or you qualify for an exemption that you can claim on your return, *you will file Form 8965 *with your tax return.


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## BBCWatcher

Bev, the Paris office isn't describing the _mechanics_ of filing. There's no discussion of line 61 in what you quoted. The IRS's instructions for Form 1040 and Form 8965 tell you how to file.

Let's not confuse the _legal_ (or regulatory) status with the _mechanics_. The outcome is the same, but the IRS tells you how they want it, and they tell you quite clearly how they want it. Just follow the instructions, that's all.


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## theOAP

Instructions for 2014 form 1040, line 61, (on page 50 of the PDF version):

Line 61
Health Care: Individual Responsibility

Beginning in 2014, individuals must have health care coverage, qualify for a health coverage exemption, or make a shared responsibility payment with their tax return.

If you had qualifying health care coverage (called minimum essential cover-age) for every month of 2014 for your-self, your spouse (if filing jointly), and anyone you could or did claim as a de-pendent, check the box on this line and leave the entry space blank.

*Otherwise, do not check the box on this line.* See the instructions for Form 8965.
(bold mine)

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf


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## Bevdeforges

Which comes back to the notion that if we are being "treated as having MEC" do you check the box or not?

You guys let me know how it turns out for you this year. I only have a few hundred $ worth of bank interest this year, so I'm off the hook for filing. 
Cheers,
Bev


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## makaloco

makaloco said:


> The way I read it, the box on Form 1040 applies to "minimum essential coverage" **for the US**, according to ACA definitions. I live full-time in Mexico and will check the box only because I have Medicare. Otherwise, I'd leave the box unchecked and claim Coverage Exemption C using Form 8539. My coverage in Mexico is irrelevant, because that's outside the US healthcare system.


Eeek, sorry, I wrote the wrong form number above, and now it's too late to edit. Form 8965 is correct for the coverage exemptions. No idea where "8539" came from!


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## xali

Would it be appropriate to both check the box AND file Form 8965?


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## BBCWatcher

xali said:


> Would it be appropriate to both check the box AND file Form 8965?


According to the instructions, no.

Folks, this ain't complicated: just follow the instructions.


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## xali

Sorry, but it IS complicated. I've read all the instructions and it's a matter of interpretation. Form 1040 instructions say to check the box if you have MEC. IRS.gov says you have MEC if you live overseas. Form 8965 instructions say you're exemption code C if you live overseas. It probably boils down to which instructions were issued last.


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## maz57

It seems pretty bizarre to me that US expat filers who are obviously not eligible for US medical coverage because they don't live in the US now have to fill out an extra IRS form to explain why they don't have the medical coverage that they are obviously not eligible for?

Wouldn't it be simpler to just instruct expats to write: "N/A-overseas resident" on Line 61? Oh wait, this is the IRS here....nothing is ever simple.


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## BBCWatcher

The _IRS's instructions_ say if you live overseas and qualify for the FEIE (whether you take it or not) you are to file Form 8965 and use reason C. They say nothing else about the _mechanics_ of how to file, and that's what counts. (Yes, you are "deemed" to have MEC... _and don't check the box, and do use Form 8965 reason C to indicate that_.)

There's a reason for the reason. At some point the IRS is going to match the checkbox with SSNs reported by carriers. (I expect for tax year 2014 they'll send some "spot check" inquiries but not to everyone with a mismatch, so they can get a survey feel for the data.) Reason C means the answer to their spot check question is already answered. So if you'd like to avoid the possibility (not certainty) of getting a letter from the IRS asking for clarification, follow their instructions. That appears to be the intention here.

As for the "couldn't we just write..." idea, no, not without making Form 1040 longer for everyone. There are too many "exception codes," and writing a bit of text on the main form would never have worked. They made the right decision in the circumstances.


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