The Lowdown on Health Insurance Tax Forms
You might find yourself wondering about the various tax forms related to health insurance and where to obtain them. Well, look no further! Let’s dive into the details.
If you have specific inquiries about your unique situation, it’s always a good idea to consult a tax advisor or the Voluntary Income Tax Assistance Program. However, to provide a general overview, there are three distinct forms used by exchanges, employers, and health insurance companies to report health insurance coverage to the IRS. Moreover, there are two additional forms that some taxpayers must complete when filing their returns.
Form 1095-A is issued by health insurance exchanges, such as healthcare.gov or state exchanges, depending on your location. This particular form is sent both to the IRS and to the policyholder.
Form 1095-A includes essential information like the cost of your plan, the price of the second-lowest-cost silver plan (also known as the benchmark plan) in your area, any premium subsidies paid on your behalf during the year, the months of coverage, and the household members covered under the plan. Essentially, this form serves as proof of your health insurance coverage for the year and is also used to reconcile your premium subsidy on your tax return using Form 8962 (more on that below).
Make sure to have your Form 1095-A in hand before filing your taxes, particularly if you received a premium subsidy or paid the full price for coverage through the exchange and plan to claim the subsidy on your tax return. Normally, your 1095-A should be available online in January. The exchange will also send it to you in early or mid-February via email, mail, or both, depending on your indicated preference upon sign-up. Should there be any delay or incorrect information on your 1095-A, don’t hesitate to reach out to your exchange for assistance.
It’s worth noting that for tax year 2020, due to the impact of COVID-19, the rules were temporarily different. Individuals who received excess premium tax credits in 2020 were not required to repay them to the IRS, and they didn’t have to file Form 8962 either, unless they needed to claim additional premium tax credits. However, these exceptions only applied to 2020, and the usual rules were reinstated for 2021 and subsequent years.
Health insurance companies, government-sponsored plans (such as Medicare, Medicaid, and CHIP), and small self-insured employers submit Form 1095-B. The IRS and the insured member both receive this form. If you purchase your own coverage outside of the exchange, you will receive Form 1095-B instead of Form 1095-A. However, it’s important to note that you may need to request Form 1095-B as it may not be automatically sent to you as it was in the past.
Form 1095-B primarily provides information about who was covered and the specific months of coverage. It’s important to mention that premium subsidies are not available for plans that submit a 1095-B. Additionally, since there is no longer a penalty for not having health insurance (unless your state has its own individual mandate penalty), proof of coverage is not as significant as it was before 2019. Several entities that used to submit Form 1095-B no longer do so, as most states no longer require individuals to demonstrate health insurance coverage nor include a health insurance question in the federal tax return.
Form 1095-C is sent by large employers that are obliged to provide health insurance coverage according to the ACA (Affordable Care Act). This requirement applies to employers with 50 or more full-time equivalent employees, also known as applicable large employers. Form 1095-C is submitted to both the IRS and full-time employees (those working more than 30 hours per week). The form must be provided to all employees who were eligible for enrolling in the employer’s plan, regardless of whether they actually enrolled or not.
If you were enrolled in your employer’s plan or chose not to have insurance, Form 1095-C is generally not mandatory when filing your taxes. However, if you are in a state that imposes a penalty for not having insurance, it could serve as proof of coverage. It’s essential to keep in mind that declining an employer’s offer of coverage and enrolling in a Marketplace plan may result in the unavailability of Marketplace subsidies if the employer’s plan is deemed affordable and provides sufficient value. If you receive both a 1095-A and a 1095-C for the same months of the year, it’s advisable to consult a CPA to ensure the proper reconciliation of your premium tax credit.
Which Form Will I Receive?
For the majority of individuals, only one of the three forms mentioned above will be received. However, there are cases where you may receive multiple forms.
Suppose you work for a large company that offers coverage but opted to purchase coverage through the exchange. In that case, you will receive both Forms 1095-A and 1095-C. Form 1095-C would indicate that you were offered employer-sponsored coverage, even if you declined it.
It’s important to remember that any form you receive is also sent to the IRS, ensuring that everyone is on the same page.
Arrival of the 1095 Form
For coverage starting from 2016, the deadline for exchanges, health insurers, and employers to submit forms is typically January 31 of the following year. However, the IRS has often granted deadline extensions for the distribution of Forms 1095-B and 1095-C. The deadline to distribute the 2021 forms was extended to March 2, 2022, and it is proposed to make this extension permanent.
Forms 1095-A (received from exchanges) for 2021 coverage should have been sent to enrollees by January 31, 2022. Sometimes these forms take a while to arrive, so you may have received yours in February. If you didn’t receive it or misplaced it, you can log in to your online exchange account to view your 1095-A.
Depending on where you obtained your health insurance in 2021, your form may have arrived in January, February, or March. If you don’t receive your form in a timely manner, feel free to reach out to the exchange, your health insurance company, or your employer, depending on who should send it to you.
For most Americans, filing taxes related to health insurance is a straightforward process. Since there is no longer a federal penalty for not having insurance, individuals can simply check the “health care coverage for the full year” box on their federal tax return. However, please note that some states—California, New Jersey, Rhode Island, Massachusetts, and DC—still require this box to be filled out on state tax returns.
However, if you received a premium subsidy from the exchange or paid the full price through the exchange but are eligible to claim the subsidy on your tax return, Form 8962 must be completed along with your tax return.
Completing Form 8962 is crucial because, without it, you will be ineligible to continue receiving a subsidy in the future. This form is essential for millions of people who receive premium subsidies on the exchange. Similarly, if you paid the full price for a Marketplace plan during the year and are eligible for a premium tax credit, you will use Form 8962 to claim your tax credit. The information from Form 1095-A is utilized to complete Form 8962.
Form 8965, which was previously used to claim individual mandated penalty exemptions for individuals who did not have minimum essential coverage between 2014 and 2018, is no longer required for current tax returns. However, some states have implemented their own individual mandates, allowing residents to claim exemptions using state tax forms. Health insurance exchanges may also provide exemptions from the individual mandate, which are necessary for enrolling in a catastrophic health plan if you are 30 years old or older. It’s important to note that exchanges employ their own form for this purpose, distinct from an insurance form.
Louise Norris, an individual health insurance broker, has been providing insightful articles on health insurance and health reform since 2006. Her contributions, including opinion pieces and educational articles on the Affordable Care Act, have been widely recognized by healthinsurance.org. Media outlets covering health reform and other health insurance experts regularly cite her state health exchange updates.
So, now that you’re equipped with more information on finding your 1095 tax form, go ahead and tackle your taxes with confidence!