What is Form 1095?

When tax season comes around, you might receive Form 1095. This form is related to your medical coverage, and was instituted after the Affordable Care Act, or Obamacare, was signed into law by President Barack Obama in 2010. This law overhauled and expanded medical coverage to more citizens in need, and introduced another tax document into our yearly taxes. This IRS form is sent to everyone who received health insurance through a health insurance provider.

With the passing of Obamacare, your current health insurance coverage now affects your taxes. Your status determines whether you’re eligible for tax credits or penalties. There are three types of Form 1095, including form 1095-A, Form 1095-B, and Form 1095-C. Each tax document confirms if and what type of health coverage you have, and how this influences your tax status. They each show detailed information including effective date of coverage, any premium amounts, and advance payments of the premium subsidy or tax credit. Work with Community Tax, and you’ll receive expert tax preparation services that take into account your health insurance.

Form 1095-A, Health Insurance Marketplace Statement

You’ll receive Form 1095-A if you bought your health insurance plan through online insurance markets, known as the “Marketplace.” If you buy your coverage through the Marketplace, you may be eligible for the Premium Tax Credit. This tax credit offsets some of the costs of your health coverage. The form should include your name, the amount of coverage you have, any tax credits you’ve earned, and any tax credits you’ve used.

Form 1095-B, Health Coverage

If your insurance falls under what Obamacare calls “minimum essential coverage,” you can expect to receive Form 1095-B. This form requires that your insurance pay a minimum level of benefits so you don’t pay a penalty. Types of insurance that qualify include:

  • Government-sponsored healthcare plans
  • Plans provided by an employer
  • Minimum health coverage bought through the Marketplace
  • Any individual health insurance policy you bought before Obamacare was put into place

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance

Form 1095-C is issued to anyone who was a full-time employee working for an applicable employer within the last year. Your employer typically needs to have 50 or more full-time employees to qualify. If you were not a full-time employee, you’ll receive Form 1095-C if your employer offered insurance and you or a family member participated in that coverage. You may receive more than one Form 1095-C if you worked for more than one large employer in the last year.

Do I Get Penalized If I Don’t Have Health Insurance?

You must have proof of insurance in order to avoid penalties. You’re required to receive Form 1095-B or Form 1095-C as proof that you had minimum essential health coverage under the Affordable Care Act. If you didn’t have coverage for at least ten months of the year and you don’t meet exemption requirements, you may be subject to a penalty. This penalty, known as the “individual shared responsibility payment,” costs the greater of 2.5 percent of your household income, or $695 per adult and $347.50 for a child under 18. For families, the penalty can cost no more than $2085. If you get penalized, consult our professionals and we’ll offer the services you need to stay on top of your tax debt.

Am I Exempt From Health Insurance Coverage?

There are some instances in which an individual or family is exempt from health insurance coverage, including:

  • If you had a gap in coverage that exceeded no more than three consecutive months.
  • You contribute to 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.

Can I Receive All Forms In a Year?

It’s possible to receive Form 1095-A, Form 1095-B, and Form 1095-C all within a single year. If you were covered by a non-marketplace health insurance policy for one part of the year, and a market policy for another part, you’ll receive more than one form.

If you work for a company with 50 or more employees and the coverage provided is through an insurance company, expect to receive Form 1095-B from your insurance company and Form 1095-C from your employer.

Do I Need to Include Form 1095-A, Form 1095-B, or Form 1095-C In My Tax Return?

Form 1095-B and Form 1095-C are purely informational, so you don’t need to send a copy to the IRS. The IRS receives their own copy of the forms, and they’ll notify you if they notice any discrepancies in their records. Don’t wait to file your tax return before you receive Form 1095-B or 1095-C. You probably won’t need to amend your return, but if you do, you can fill out and send Form 1040X to correct the problem.

If you will receive a Form 1095-A this year, you must wait until you receive your copy before you file. This way you can avoid reporting incorrect information on your tax return. Should you not receive Form 1095-A a few weeks before the due date, contact your provider to send you another copy.

Should I Get Tax Help for Form 1095?

Seeking the help of a tax professional can save you a lot of time and money. With our team of tax advocates by your side, you’ll get expert advice from certified professionals who can help you reach your financial goals. Whether you want help understanding how your health insurance affects your taxes, or you need to fix an error on a tax return, Community Tax can create a plan so you can build a positive financial future.

Community Tax has helped over 44,000 clients with their tax issues, and resolved over $250 million in tax debt. Reach out to us today at 999.676.4319 for a free consultation.