Under ObamaCare, you are allowed one short coverage gap exemption which covers less than three months in a row without coverage each year. In other words you are exempt for two full months, but need to have coverage for at least one day of the third month.

Beyond the short coverage gap exemption, there are other important coverage gap exemptions to be aware of. Most importantly, anyone who got covered during open enrollment will not owe the fee and can take a CODE “G” coverage gap exemption.

TIP: Generally, if you purchased coverage during open enrollment you are exempt from the fee. Make sure you take all necessary exemptions on form 8965. In some cases another exemption will need to be taken aside the short coverage gap exemption.

Important Coverage Gap Exemptions

There are a few coverage gap exemptions, one for going less than three months without coverage, one for getting covered during open enrollment, one for a coverage gap in CHIP coverage. They are all claimed on the 8965 exemptions form and don’t require an ECN number.

Short Coverage Gap

Short coverage gap — You went without coverage for less than 3 consecutive months during the year.

CODE B

Gap In Coverage During 2014 Open Enrollment

Gap in coverage at the beginning of 2014 — You had a coverage gap at the beginning of 2014 but were either enrolled in, or were treated as having enrolled in, coverage through the Marketplace or outside of the Marketplace with an effective date on or before May 1, 2014.

CODE G

Gap in CHIP Coverage

Gap in CHIP coverage — You applied for CHIP coverage during the initial open enrollment period and were found eligible for CHIP based on that application but had a coverage gap at the beginning of 2014.

CODE G

To clarify the short coverage gap length: It’s not a three month coverage gap exemption, it’s a “less than three” month coverage gap exemption. This can be confusing as 1. It’s often referred to as a “three month coverage gap exemption” or talked about as covering “up to three” months. 2. You were allowed additional months in 2014 due to open enrollment being extended. In general if you enroll during open enrollment and maintain coverage all year, you are exempt from the fee.

Other Common Exemptions

Here are some common exemptions from the fee claimed on the 8965 exemptions form. These exemptions all last the entire year unlike coverage gap exemptions. You can claim more than one exemption for the same month, but you won’t need to claim other exemptions if:

Coverage Gap Exemptions

Here are how coverage gap exemptions apply for those who didn’t have coverage, or had a coverage gap:

I had coverage, but had a gap of less than three months. You can claim the “short coverage gap exemption” CODE “B”.

I had coverage, but had a gap of more than three months. You can claim the “short coverage gap exemption” CODE “B”. This only applies to the first gap in coverage of the year. If you got covered during open enrollment, don’t forget to take that exemption as well.

I had coverage and got covered before May 1st, 2014. You’ll claim the “gap in coverage at the beginning of 2014” exemption. (There is also a coverage gap exemption for CHIP)

I got covered during a special enrollment period, but didn’t have coverage until after May 1st, 2014. You can claim the “short coverage gap exemption” CODE “B”.

I had coverage during the year, but lost it and didn’t get covered. You can claim any exemption you qualify for, including the “short coverage gap exemption” CODE “B”. You’ll owe the fee for the months you didn’t have coverage.

I didn’t get coverage during the year. You can claim any exemption you qualify for, but not the “short coverage gap exemption” CODE “B”. You’ll owe the fee for the months you didn’t have coverage.

I had limited benefit coverage. For 2014 you may be able to claim the “minimum benefit Medicaid coverage” exemption. Limited benefit coverage, like short term, doesn’t protect you from the fee. However, for 2014 only, due to confusion, you may be able to get a special exemption from the Marketplace. You can claim any other exemption you qualify for. You’ll owe the fee for the months you didn’t have coverage.

Facts on ObamaCare and Coverage Gaps

  • If you have more than one coverage gap then only the first one is exempt, unless you have another exemption.
  • There was a special coverage gap exemption for 2014 that is extended to anyone who enrolled during open enrollment.
  • In order to qualify for the short coverage gap you must have coverage in the year.
  • Coverage gaps are based on calendar years. So you can have one at the end of one year and one at the start of the next.
  • If you qualify for a hardship exemption during the year, you may be allowed more than one gap due to having more than one exemption. Many exemptions “stack”.
  • You may be able to qualify for both the exemption for getting covered by the end of open enrollment (Gap in coverage at the beginning of 2014), and a short coverage gap exemption. However, the short coverage gap exemption states that only the first gap of less than three months is counted. This alone may bar you from stacking these, although the instructions don’t specifically state you can’t. (Please use contribute button to clarify if you have the answer.)
  • Any month you have at least one day of coverage counts as “having coverage”.
  • When you file the exemptions form you’ll write CODE “B” for the short coverage gap exemption.
  • You don’t need to apply for a short coverage gap before hand, a ECN is not needed for a short coverage gap exemption.

See details on exemptions, exemption list, and the exemption form to file for IRS.