Beginning in 2016, individuals who have health insurance should receive one of three new tax forms for 2015: the Form 1095-A, Form 1095-B or Form 1095-C. The forms are sent to individuals who are insured by marketplaces, government agencies or their employers. You do not need to wait for them to file your taxes, and they do not have to be attached to your tax return. However, the forms are important. They assist filers in filling out their tax return and should be kept for tax records.
Everyone must state whether or not they have health insurance on their tax return. Those who don’t might face a penalty in the form of a federal tax liability called the individual mandate. The Patient Protection and Affordable Care Act created the mandate requiring most individuals in the U.S. to have health insurance. To enforce the rule, the Internal Revenue Service (IRS) relies on the reporting of health insurance providers and individuals. The Form 1095 documents help those with health insurance correctly fill out their tax return and avoid wrongfully paying the penalty.
Like a W-2 or a Form 1099 that include information about an individual’s income, the Form 1095 documents contain information about health insurance for the previous year. The 1095 form individuals receive depends on whether they purchased health insurance on a marketplace or if they opted to participate in a plan offered by their employer. We’ve broken down each 1095 document below.
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The Form 1095-A is sent to individuals who enrolled in a marketplace plan during the year they are filing taxes for. The form is a statement from the respective marketplace (either the HealthCare.gov federal marketplace or one of the state-run healthcare exchanges) acknowledging that an individual was enrolled and includes information about the coverage. It also includes information about who was covered, such as family members.
If a Form 1095-A indicates a recipient and their family had health insurance coverage for the full year, then they can check that box on their tax return, such as a 1040. If not, they might qualify for an exemption or need to make an individual shared responsibility payment. This also is the case for the two other forms that follow.
Form 1095-C is the tax form companies send to employees that acknowledges that the employee participated in a health insurance plan offered. Generally, companies with 50 or more employees offer such plans and employees can choose to participate or not. If an employee opts out of coverage through their employer, the employee is still subject to the individual mandate. In that case, the employee will need to get a policy on or off the marketplace to avoid a penalty. Some employees also might opt out of coverage if they are already covered by a family member’s health insurance plan.
Companies report to the IRS whether or not employees participate in their health plans. They also send employees the Form 1095-C to keep as a tax record. Like the Form 1095-A, individuals who receive a Form 1095-C do not need to attach it to their tax return.
Individuals and their families who do not receive a Form 1095-A or Form 1095-C should receive a Form 1095-B. Healthcare providers, government agencies and employers who are not required to send the other forms, are required to send a Form 1095-B to individuals they provide health insurance to. These entities include insurance companies outside the marketplaces, government agencies such as Medicare or CHIP, and companies that self-insure employee healthcare plans.
When do I receive my Form 1095 document?
The deadline for the marketplace to provide enrollees with their Form 1095-A is February 1, 2016. The deadline for insurers, companies and government agencies to deliver Forms 1095-B and 1095-C to their respective insured individuals has been extended to March 31, 2016.
Having a Form 1095 document helps when filing a tax return, but it is not necessary to complete a filing. Individual taxpayers that want to file their tax return and know whether they had health insurance for the entirety of the previous year can complete their tax return form. The extension of the Form 1095-B and Form 1095-C delivery to should not keep them from filing their tax returns normally.