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At the end of a plan year, you should receive documents or a letter regarding your health insurance coverage. This is known as a 1095 form which provides details about the amount along with the period of time you received coverage. A 1095 form acts as proof of your health insurance and is useful to keep for your own personal records. Although they are not necessary to file your tax return, 1095 forms can be used as documentation for any extra deductions you want to claim on your taxes. Depending on where you receive your health insurance coverage from you would be provided with one of three forms that outline your policy.
Proving Health Insurance for Your Tax Returns
Individuals who have health insurance should receive one of three tax forms for the 2020 tax year: the Form 1095-A, Form 1095-C or Form 1095-B. The forms are sent to individuals who are insured through marketplaces, employers or the government. You do not need to wait for the forms to file your taxes, and they do not have to be attached to your tax return.
However, the forms are important. They provide information required for your tax return such as the total amount of premiums paid and the time frame you were covered. You can use this information if you plan to deduct health care expenses, and you'll also want to keep the documents for your records.
During the first years of the Affordable Care Act (ACA), 1095 forms were more important as they would allow the IRS to verify health insurance coverage. If the IRS identified gaps in health coverage, then you would be required to pay the tax penalty for not having minimum essential coverage. In 2020, the tax penalty for lacking coverage is no longer in effect. But, as mentioned above, the forms are still useful for filing tax returns and claiming tax deductions.
Like a W-2 that includes information about an individual's income, the Form 1095 contains information about health insurance for the previous year. The form you receive depends on whether you purchased health insurance on a marketplace or if you participated in an employer's health plan. We've broken down each 1095 document below.
You would receive the Form 1095-A if you were enrolled in a marketplace health plan during the tax year. The form is a statement from the marketplace (either the HealthCare.gov federal marketplace or one of the state-run health care exchanges) acknowledging you were enrolled in medical insurance coverage, and it also includes information about the policy. That information includes:
- Effective date of coverage
- Amount of premiums
- Dependents covered under the policy
- Any advance payments from premium tax credits
Form 1095-C is the tax form companies send to employees that acknowledges the employee participated in an employer health insurance plan. Furthermore, the form provides policy information and who was covered under the plan. Generally, companies with 50 or more employees offer such plans and employees can choose to participate or not.
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. This includes people who receive insurance from health care providers, government agencies and smaller employers who are not required to send the other types of forms. For example, you may receive a 1095-B if you bought health insurance coverage from a health provider outside the marketplaces or participated in a government program such as Medicare or CHIP.
When Do I Receive my Form 1095 Document?
The deadline for the marketplace to provide you with a Form 1095-A is Jan. 31. The deadline for insurers, companies and government agencies to deliver forms 1095-B and 1095-C has been extended to March 4. It is important to note that having a Form 1095 document may help you calculate deductions, but it is not necessary to complete a filing. This means you do not need to wait for one of these documents to arrive to fill out your tax return.
How Do 1095 Forms Relate to My Tax Returns?
If you used premium tax credits to pay for your marketplace health insurance costs, these would be listed on your Form 1095-A. An advance premium tax credit helps lower your monthly health insurance premium. The sum of the credits and related details are required when filing your tax return, as any differences between what you used and the amount you are eligible for would need to be reconciled.
To reconcile this information, check the 1095-A form:
- If you used more credits than you were due, then you would owe additional tax on the difference between the two amounts.
- If you used less than you were eligible for, then you would receive a tax refund on the difference.
However, you would not need to file a tax return solely because you received either the Form 1095-B or 1095-C. For instance, if you are enrolled in Medicaid, you would receive the 1095-B. If you had no other tax-filing obligations, then there would be no need to file a tax return.