Taxes

IRS Form 1095: What you need to know

Stephen Fishman
Tax expert and contributor MileIQ

If you have health insurance, either through your employer or on your own, there’s a good chance you’re going to get an IRS Form 1095 by the end of January. Here’s what you need to know about this form from the IRS.

Three types of Form 1095

There are three different types of Form 1095, A, B, and C. Applicable to all, you don’t fill these forms out or include them with your tax return. Instead, your health insurer or your employer completes them and sends copies to you and the IRS. They contain important information about your health insurance coverage.  

  • Form 1095-A, Health Insurance Marketplace Statement: The Health Insurance Marketplace sends this form to you if you or a family member enroll in coverage through the Affordable Care Act Marketplace.
  • Form 1095-B, Health Coverage: Health insurance providers send this form to individuals who obtain coverage themselves from health insurance companies. They also send them to employees of small companies (50 or fewer employees) who provide their employees with health coverage. This one is the least used 1095 form.
  • Form 1095-C, Employer-Provided Health Insurance Offer and Coverage: Large employers—those with 50 or more full-time equivalent employees—are required to provided health insurance to their full-time employees. They send this form to their full-time employees, with information about what coverage the employer offered the employees.  

Form 1095-A

Form 1095-A is by far the most important of these forms. Again, you’ll receive this form only if you obtain your health insurance from an Affordable Care Act (ACA) Marketplace (also called the exchange). The exchange prepares and sends this form to you. It also sends a copy to the IRS.  

Deadline to receive Form 1095-A

Your ACA exchange postal mails Form 1095-A to you by January 31. However, if you elected to receive the form electronically, you can download it from your ACA website.  

If you don’t receive this form by early February, contact your health insurance exchange. You will need the information on this form to complete your income tax return. You need not file Form 1095-A with your return, but you should keep it with your tax records.

Form 1095-A reports your health premium tax credits

Most people who get their health coverage through an ACA exchange get tax credits to help pay for their coverage. These premium tax credits can be substantial. The amount depends on your income and the cost of your health coverage.  

Most people have these credits paid directly to their health insurer by the federal government. Form 1095-A shows the type of health coverage you and your family received, how much it cost, and the amount of premium tax credits paid each month to your health insurer.  

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Reconciling premium tax credits

Now, here comes the tricky part. You need to determine if the amount of the subsidies paid to your health insurance was correct. This number depends on your modified adjusted gross income as shown on your return for the year.

When you applied for ACA tax credits, you estimated what your income would be for the year. If this estimate turned out to be accurate, there’s no problem. But if the forecast was too low, you may have to pay back part (or even all) of the premium credit payments made on your behalf.

On the other hand, if your estimate was too low, you could qualify for extra premium payments, which the IRS will pay to you. Reductions in family size during the year, such as a divorce or death, could also result in you having to pay back all or some of the subsidies.

The amount you’ll have to pay back depends on your annual family income. If your income was below 400% of the federal poverty level, there is a ceiling on the amount you’ll have to pay back, even if you received more in assistance than the amount of the cap. However, at higher income levels, you’ll have to pay back the entire amount you received. You list the amount you have to repay in the “Tax and Credits” portion of your return and pay it with the rest of your income taxes.

You calculate whether the advance premium payments were correct on IRS Form 8962, Premium Tax Credit, which you must file with your return. Calculating whether the premium payments were accurate is complex. You can find a step-by-step guide here. However, if you prepare your taxes yourself, you should use tax preparation software such as TurboTax to help you complete this form.

No penalty for failure to have health insurance coverage

Before 2019, all individuals had to have minimum health insurance coverage. Those who failed to obtain any coverage had to pay the penalty to the IRS. This name of this penalty was the shared responsibility payment. Your Form 1095-A was proof you had the required coverage and didn’t have to pay the penalty.

However, Congress, starting in 2019, Congress ended the penalty for failure to get health coverage. So you don’t need to prove to the IRS that you had health coverage. But you still need it to calculate your premium tax credit.

Form 1095-B

You would get this form if you obtained health insurance coverage from a health insurer. The form comes from your insurer. It shows who in your family received health insurance coverage and for how many months.  

Form 1095-B is proof that you and the other family members listed on the form had health coverage. This record used to be important because people who failed to obtain coverage had to pay a penalty. Since there is no longer a penalty, proof of coverage is no longer relevant. You won’t be asked if you had coverage on your 2019 or later tax returns.

You don’t need to file this form with your return. Nor do you need it to complete your return. If you got a 1095-B, you likely didn’t receive any premium tax credits. So there is no need to do any reconciliation as most people must do when they receive Form 1095-A. Just keep the form with your tax records.  

Form 1095-C  

The Affordable Care Act imposes specific responsibilities on large employers. These are employers with 50 or more full-time equivalent employees. Such large employers must offer their employees health insurance coverage or pay a substantial penalty to the IRS.  

Large employers must file Form 1095-C with the IRS to report data about the health care coverage that your employer offered to you, even if you chose not to take that coverage. The form us used by the IRS to ensure that the employer complied with the Affordable Care Act’s requirements.

If you’ve worked full time for a large employer for at least one month of the year, you’ll receive the form in addition to your W2. You do not need to file this form with your tax return. Just keep it in your tax records.

Like Forms 1095-A and 1095-B, Form 1095-C is proof you had health care insurance. But, as explained above, this is no longer important because there is no longer a penalty for not having insurance.  

You don’t need Form 1095-C to file your tax return. So please don’t wait until you receive it to prepare your return.  

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