What Is Form 1095-A?
When the Affordable Care Act, also known as Obamacare, was signed into law by President Barack Obama in 2010, federal law expanded medical coverage to more citizens across the country. This law provides consumers with subsidies, or premium tax credits, for households with incomes between 100% and 400% of the federal poverty level. The act requires that all taxpayers have medical insurance and that the insurance providers cover a list of “essential health benefits” to cover an individual’s or family’s basic needs.
With the Affordable Care Act now in place, your health coverage affects your taxes and whether you’re qualified for tax credits. Form 1095-A is a subcategory of Form 1095, a form that pertains to your current healthcare insurance status.
What Is a Health Insurance Marketplace Statement?
Form 1095-A, Health Insurance Marketplace Statement is a tax document that refers to a health insurance plan bought through the “Marketplace.” The Marketplace is an online insurance market that helps people shop for and enroll in health insurance that suits their budget. The federal government runs the Marketplace in most states, while some states run their own Marketplaces. You can find more information about specific insurance plans through the Marketplace at HealthCare.gov.
If you operate a small business, you can use the Small Business Health Options Program, or SHOP Marketplace to provide health insurance for your employees. You’ll be required to send Form 1095-A to your employees during tax season.
What Information Is Provided on Form 1095-A?
Form 1095-A is provided for informational purposes only. When you receive Form 1095-A, keep the copy in your records and do not send it to the IRS, as they get their own copy from your provider.
The information on Form 1095-A contains guidance and instructions to help you file an accurate tax return. Do not file your taxes until you receive Form 1095-A, or else you risk making mistakes. If you don’t receive Form 1095-A within a few weeks of the due date, contact your provider to send you another copy. If you file without Form 1095-A and the IRS reports a discrepancy, you can amend your return using Form 1040X. A tax professional from Community Tax can resolve any tax mistakes and amend your return for you.
Part I: Recipient Information
The first portion of Form 1095-A contains basic information regarding you and your spouse’s Social Security number, date of birth, and address. It also contains information about the insurer, including the Marketplace Identifier and policy number.
Part II: Covered Individuals
Part II of Form 1095-A includes five lines with space to provide other individuals covered under the Marketplace insurance. It will have each individual’s Social Security number, date of birth, coverage start date, and coverage termination date (if applicable).
Part III: Coverage Information
The last part of the form shows a detailed account of coverage for each month of the year. It’s separated into three columns, including:
- Monthly enrollment premiums
- Monthly second lowest cost silver plan (SLCSP) premium
- Monthly advance payment of premium tax credit
Form 1095-A also provides specific information and instructions regarding each line of the form.
Do I Qualify For a Premium Tax Credit?
If you bought your insurance plan from the Marketplace, you may qualify for a premium tax credit. This credit only applies to people who purchase from the Marketplace. If you’re eligible, you can claim the Premium Tax Credit throughout the year to lower your monthly health insurance premiums, or claim the credit on your tax return to either lower your overall bill or increase your tax refund. In order to qualify, your income has to be within a certain range–between 100% and 400% of the federal poverty level. A tax preparer from Community Tax can calculate if your income falls in this range to take advantage of this credit.
Can I Be Exempt From Health Insurance Coverage?
Your household might be exempt from health insurance coverage if any of the following conditions apply to you:
- You had a gap in coverage that surpassed no more than three successive months.
- You pay a provider that is exempt from the Affordable Care Act.
- The minimum required payment for annual premiums is more than eight percent of their household income.
- Your financial situation doesn’t allow you to attain coverage, like financial hardship.
Do I Get Penalized If I don’t Have Health insurance?
The Affordable Care Act requires that all citizens have proof of insurance, or else suffer penalties. Your provider should send a copy of Form 1095-A to you and the IRS before the filing due date so you can file an accurate return. If for any reason you didn’t have health coverage for over three consecutive months over the last year and you don’t meet exemption requirements, you might be subject to a penalty. Known as the “individual shared responsibility payment,” it costs the greater of 2.5 percent of your household income, or $695 per adult and $347.50 per child under the age of 18. For families, the cost can’t exceed more than $2085.
Do I Need Form 1095-A to File My Return?
The information contained in Form 1095-A is exclusively for your records, but you should have one before you complete your return. Filing your taxes before you obtain Form 1095-A can result in mistakes, and the IRS may send you a letter noting any discrepancies in your taxes. If you already filed without Form 1095-A and you think you’ve made an error, you can amend your return using Form 1040X. Like all tax documents, keep copies of Form 1095-A for at least three years.
What If I Need More Help with Form 1095-A?
Whether you received your first Form 1095-A, or you want someone to give you expert advice on your taxes, the team at Community Tax can help. We’ve helped over 44,000 clients resolve over $250 million in tax debt, and we’ve worked with almost every tax situation imaginable. Our certified tax experts can prepare your taxes, represent you before the IRS, and come up with a comprehensive plan so you can reach your financial goals. Contact Community Tax at 999.676.4319 for a free consultation about our services.