Most of us are beginning to prepare to file federal income tax returns for 2015. Fortunately, El Nino has provided us some rainy days to stay inside and work on this task. It’s so much fun to try to track down all the necessary forms and paperwork to bring to the taxpreparer or to your computer station, if you are doing it yourself.
Individuals will be receiving forms regarding their healthcare coverage for 2015 that may be necessary for the completion of their tax returns. Depending on where the insurance was purchased will determine which form you will receive.
Form1095-A:
The Health Insurance Marketplace, also known as Covered California, will be sending out Form 1095-A (information statements) to members. This form applies only to plans purchased on the Exchange. These statements will detail members’ premiums and advance tax credit payments for the 2015 enrollment year. The APTC is also known as the subsidy that the government paid toward an individual’s premium.
Form 1095-A doesn’t come directly from the insurance company, but from Covered California. If the form is not received or is lost, members will need to go to www.coveredca.com to log into their account to download the form or call 800-300-1506.
It’s not exactly easy to find once you log in to your Covered California account, so this might help. After you login, click on the “Summary” box and then scroll to “Documents & Correspondence.” Look for Notice NOD62A_2015.
Members will use Form 1095-A to fill out Form 8962, which can be obtained on IRS.gov. This will help to determine the difference between any advance payments of the premium tax credit that was received and the premium tax credit for which you actually qualified. We have consistently informed our clients that there is a reconciliation when you do your taxes. This is how and when it is done.
Remember, the amount of premium tax credit that members received for 2015 was based on an estimation of their income for the year 2015. The final amount of tax credit is based on actual income reported on the tax return. Some folks may get a tax refund if they over-estimated income or may owe additional taxes — to repay the APTC — if they underestimated income.
Form1095-B:
This form is sent to members that purchased plans off the Exchange and contains information about who was covered and when. You do not need to wait to receive Form 1095-B to file the tax returns for 2015. However, when it’s received it’s important to review the information and advise your carrier of any discrepancies. If the plan is fully insured, the form will come from the insurance company. If you were insured by multiple entities, be sure to review the forms for accuracy.
This form is also received if you are covered under a small self-insured plan.
If the individual had periods without insurance, they can apply for an exemption. Information is available at https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions. For the most part you are allowed to go for 60 days without insurance and no pay a penalty. This is to allow for waiting periods at a new group plan.
Form1095-C:
This form will tell you about what insurance was offered to you by your “applicable large employer.” You may not have chosen to enroll, but if it was offered, your employer must complete this form and send it to you. In addition, that information is reported to the IRS by your employer.
This is important because if you were offered “affordable” minimum value insurance, you are not eligible for subsidies on the exchange. “Affordable” is defined as the employee’s share of premium for employee-only coverage as costing less than 9.5 percent of the employee’s W2 income with that employer. If the insurance is “affordable” for the employee, the entire family is disqualified from subsidies. For 2016, the percentage increases to 9.6 percent.
As I write this column, a lovely sunny day is predicted for today. So if it has come to be, I give you permission to put this all off until next weekend. Super Bowl fans had probably already made that decision.
