The 1095 Tax Form to Verify Health Care Coverage: What You Should Know

Thanks to the Affordable Care Act (ACA), millions of Americans will receive the new tax form 1095 in the mail for the second consecutive year.  For individuals without health insurance coverage, the form determines what fee they must pay for noncompliance with federal health care mandates. For those who participate in the health care marketplace, the form is used to determine if they will receive an additional premium tax credit or are required to pay back part of an advance tax credit. For workers with employer-provided health insurance, the form shows the coverage that is offered by their employer.

There are three versions of the tax form to verify health insurance coverage (1095-A, 1095-B and 1095-C), which has created some confusion about what must be done with the information.  Only those who are expecting to receive a Form 1095-A should wait to file their 2017 tax return until receiving it.

It is not necessary to wait for Forms 1095-B or 1095-C in order to file, and individual taxpayers should file their returns as they normally would.

Here’s a brief explanation of the different versions of the 1095 tax form to verify health care coverage:

Form 1095-A

This statement is sent to people who receive health care coverage through a federal or state health insurance exchange.  It allows individuals to take the premium tax credit, reconcile the credit on their tax returns with advance credit payments, and claim any premium tax credits that may be due. Insurance companies participating in health care exchanges also send a copy of this form to the IRS.

Form 1095-B

Employers with fewer than 50 employees and health care insurance providers send this form to individuals covered by their health insurance plans. It is used to verify that employees and their dependents have at least the Minimum Essential Coverage required by the ACA.

If a person has a break in coverage during the tax year, he or she may have to pay an individual shared responsibility payment that is pro-rated over a 12-month coverage period.  They may be exempt from this payment if ACA coverage is not offered by their employer, the gap in insurance coverage is three or less consecutive months, or the IRS has already deemed them exempt from participating in the ACA.

Form 1095-C

Companies with more than 50 full-time or full-time equivalent employees provide this form with information about the employer-provided insurance offer and coverage, and whether or not an individual has chosen to participate in the plan. It is used by individuals to complete their tax returns.

On Dec. 22, 2017, the Internal Revenue Service announced a 30-day extension of the deadline for employers to provide2017 health coverage Forms 1095-B (provided by the health plan) and 1095-C (provided by the employer) to individuals.  However, the due dates for filing paper and electronic tax returns have not changed.

While only 1095-A is required to file a tax return, the information on all three versions may prove helpful in preparing your tax return. Be sure to check all information carefully to ensure the form accurately reflects your health coverage for the prior year. Also, consult your accountant or tax professional with any questions and to ensure all tax filing requirements are met.