2016 marks the second year that Americans are required to report their health insurance status on their tax return under the Affordable Care Act (ACA). For most of your clients, it looks like it will be another check the box year on Form 1040, indicating they had qualifying health care coverage for the entire year.
In a continued effort to streamline the health insurance reporting requirement under ACA, taxpayers who have non-Marketplace health insurance will receive the new Form 1095-B and 1095-C (see details below), from large employers and, in many cases, their health insurance carrier, but will not have to attach or enter information from the forms on their 2015 tax returns filed in 2016. This means that if you had non-Marketplace health insurance during the 2015 tax year, these new forms will be for informational purposes only and you’re not required to send in proof of health care coverage to the IRS. However, you should keep these documents with your other records. Other documentation serving as proof of coverage includes insurance cards, explanation of benefits’ statements from your insurer and W-2 or payroll statements reflecting health insurance deductions.
If you changed jobs or your benefit plan during the year, or added or dropped dependents from your coverage, you should verify that the forms indicate you and any dependents you claim had coverage for the entire year, or make a note about any gaps in coverage that occurred. Be sure to check the forms for accuracy. When you receive both of these documents, Form 1095-B from a provider, and Form 1095-C from a large employer, you may be confused, but the information on these documents should be consistent.
If you purchased health insurance in the Health Insurance Marketplace, you will still report health insurance information from Form 1095-A like last tax season.
Form 1095-B, Health Coverage Statement
- Issued by a government-sponsored program (such as Medicare), eligible employer-sponsored plan, individual market plan or miscellaneous coverage plan.
- Provides information about whether the taxpayer, spouse and dependents had qualifying health coverage (minimum essential coverage) for some or all months during the year.
- Individuals with minimum essential coverage are not subject to the individual shared responsibility payment (ACA penalty).
Form 1095-C, Employer Provided Health Insurance Offer and Coverage Statement
- Employers with 50 or more full-time employees are required to file Form 1095-C with the employee and IRS.
- Includes information about whether the employer offered qualifying health coverage to an employee, spouse and dependents for some or all months during the year.
- Form 1095-C is used to determine whether the employer shared responsibility provision applies, whether individual shared responsibility payment applies, and eligibility of employees for premium tax credit.