Form 1095-B: Health Coverage
In 2010, former President Barack Obama signed the Affordable Care Act (ACA) into law, essentially making it a requirement for every American to secure some form of health insurance. If you neglected to meet the minimum requirements for health insurance coverage as dictated by the ACA, you would face a tax penalty at the federal level. However, as of January 2019, this tax penalty for failing to secure health insurance was eliminated from federal tax returns. With the tax penalty for those without health coverage now eliminated, obtaining health insurance is no longer a requirement unless you live in a state or territory that still mandates it, such as Massachusetts, New Jersey, Vermont, California, Rhode Island, or Washington D.C. In the areas where health insurance coverage is required, Form 1095-B can help you avoid a tax penalty. In other parts of the country, Form 1095-B can help you complete your tax return. Keep reading to learn all about Form 1095-B or skip to any section using the links below.
- What Is IRS Form 1095-B?
- Who Is Eligible for Form 1095-B?
- Difference Between Forms 1095-A, -B, and -C
- Form 1095-B Information
- Do I Need to File Form 1095-B?
- Do I Get a Tax Credit with Form 1095-B?
- Will I Be Subject to a Penalty if I Don’t Have Coverage?
- Am I Exempt From Health Insurance Coverage?
- Can Community Tax Help Me with Form 1095-B?
What Is IRS Form 1095-B?This tax season, you might receive one or more forms related to your health coverage. This includes Form 1095-A, Form 1095-B, and Form 1095-C. Form 1095-B provides vital information about your health care coverage that you should keep in your records. These forms are part of the Affordable Care Act, also known as Obamacare. This act was signed into law by former President Barack Obama in 2010, and it gave more citizens the opportunity to be medically insured. Obamacare required taxpayers to provide proof of their health insurance on their tax returns to avoid penalties. However, as of 2019, you are no longer required to pay a tax penalty at the federal level if you didn’t have health insurance during the year. Form 1095-B, Health Coverage, reports which type of health insurance you have, whether your spouse is covered under your insurance, and if dependents are covered under your plan. The Affordable Care Act required that your health insurer provide “minimum essential coverage.” These are the basic necessities that the federal government demanded each plan offer. Form 1095-B confirmed that your provider offered you these benefits so that you could avoid paying a penalty. Now that there’s no longer a tax penalty, Form 1095-B may provide you with information needed to file your federal individual income tax return or help you avoid a tax penalty in states that still mandate health coverage.
Who Is Eligible for Form 1095-B?You may receive Form 1095-B if you’re covered by health insurance companies, select self-insured employers, and general agencies that operate Medicare, Medicaid, or CHIP. If you have insurance from multiple providers, changed coverage or employers during the year, or if members of your household have different providers, you may receive more than one Form 1095-B.
Difference Between Forms 1095-A, -B, and -CForms 1095-A, -B, and -C are distinct tax forms that serve different purposes. It’s important to know which is which so that you avoid getting these forms confused. Let’s take a look at what each of these tax forms are used for:
- Form 1095-A: Form 1095-A, Health Insurance Marketplace Statement, is for individuals who get their health insurance through the Health Insurance Marketplace. This form is provided to the IRS by Health Insurance Marketplaces, as well as to individuals so that they can properly file their tax returns and fill out Form 8962, which is used to calculate a premium tax credit.
- Form 1095-B: Form 1095-B, Health Coverage, is the primary focus of this article. It’s a document sent by your employer or insurance provider that details essential information concerning your health insurance coverage. For tax years prior to 2019, this form helped you avoid a penalty by confirming that you had the minimum essential coverage required by the Affordable Care Act during the year.
- Form 1095-C: Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, is provided to employees who work for companies that employ at least 50 full-time employees, otherwise known as Applicable Large Employers (ALEs). This document provides information about the health insurance coverage offered by the employer, and you should receive one regardless of whether you decided to participate in your employer’s health insurance plan.
Form 1095-B InformationYour insurance provider or employer will likely send you a copy of Form 1095-B for your records. They also send a copy to the IRS, so you don’t need to attach it to your tax return. Form 1095-B is divided into four parts, which issue information about your coverage within the last year. Refer to this document for your personal finances or when the IRS sends you a notice with a discrepancy or bill charging missing taxes. Below, we’ll go over Form 1095-B instructions in detail.
Part I: Responsible IndividualThe first portion of Form 1095-B includes basic information, such as your name, address, Social Security number or TIN, and date of birth. It will also have the letter identifying Origin of the Health Coverage. The letter-code is listed in the instructional portion of the form.
Part II: Information About Certain Employer-Sponsored CoveragePart II identifies the name of your employer, their address, and their employer identification number (EIN). This verifies the insurance with you, the employer, and the IRS. Sometimes this portion is left blank. If you receive Form 1095-B without this section filled, you don’t need to fill in the information or return it to your reporter or coverage provider.
Part III: Issuer or Other Coverage ProviderIf you get insurance through an insurance company, an employer providing self-insured coverage, or a federal agency sponsoring coverage like Medicaid or Medicare, their information will be provided here.
Part IV: Covered IndividualsThe final portion of Form 1095-B reports the name, Social Security number or TIN, and other coverage information for each individual under the plan. It also identifies the months of coverage. There are 18 lines available for you to list each member on your insurance plan.
Do I Need to File Form 1095-B?You do not need Form 1095-B to file your return. Your employer or provider gives you a copy of Form 1095-B for your records, so you can refer to it if there’s an issue with your coverage. The IRS also receives a copy of Form 1095-B, and you’ll only receive a letter if they notice inconsistencies. Like all tax documents, you should keep a copy of Form 1095-B for your records for at least three years. The IRS may send you a notice or a bill if their information doesn’t match what you reported on your tax return. When this happens, you can refer to your copy and determine whether they’re correct. You can avoid mistakes and maximize your tax refund with our tax preparation services.
Do I Get a Tax Credit with Form 1095-B?You only receive a premium tax credit if you have Form 1095-A, Health Insurance Marketplace Statement. This form provides proof that you bought your health insurance through an online provider. If you switched providers during the previous year to or from a Marketplace plan, you may receive Form 1095-A and become eligible for a premium tax credit.
Will I Be Subject to a Penalty if I Don’t Have Coverage?Before 2019, the Affordable Care Act required that all taxpayers have health insurance. If you didn’t have health insurance, the government could issue a hefty penalty. Additionally, if you didn’t have health coverage for over three consecutive months during the tax year, or you didn’t meet other exemption requirements, the federal government could issue a penalty called the “individual shared responsibility payment.” The cost of the penalty was the greater of the following two figures: either 2.5% of your household income or $695 per adult and $347.50 per child under the age of 18. Families are penalized no more than $2,085. However, as of January 2019, you are no longer subject to a tax penalty at the federal level if you didn’t have health insurance coverage during the tax year. Keep in mind, though, that you could still face a penalty at the state level. If you live in Massachusetts, New Jersey, Vermont, California, Rhode Island, or Washington D.C., you could encounter a tax penalty if you didn’t have health coverage during the last tax year.
Am I Exempt From Health Insurance Coverage?Under the Affordable Care Act, if you weren’t insured under a plan that provided minimum essential coverage, you would be penalized. However, there were some exceptions, including:
- You went without health insurance coverage for no more than three months.
- Your provider is specifically exempt from the Affordable Care Act.
- Your minimum required payment for annual premiums is more than 8% of your total household income.
- Your financial situation doesn’t allow you to obtain health insurance, due to some kind of financial hardship.
Can Community Tax Help Me with Form 1095-B?Our team of licensed tax professionals have helped tens of thousands of clients resolve over $960 million in tax debt. Whether you just switched insurance providers in the last year, or you need help paying a bill from the IRS, let our team create a strategy so you can resolve your tax debt. Reach out to Community Tax today by visiting our website or calling us at (844) 328-5857 to get a free consultation and learn about our helpful tax services.