This year, you may receive a new tax form outlining details of the healthcare coverage you and your dependents had in 2015. These forms are used to support the Individual Shared Responsibility Provision of the Patient Protection and Affordable Care Act, commonly known as “ObamaCare.” Under this provision, all individuals, including elderly and children, are required to maintain what the law defines as “minimum essential coverage” for all months within the year unless they have a qualifying exemption. Individuals who failed to meet this criteria must pay a shared responsibility fee to “reform and improve the availability, quality and affordability of health insurance coverage in the United States.”
The forms you receive depends on the coverage that you and your dependents had during the year. There are three different 1095 forms:
- 1095-A Health Insurance Marketplace Statement – This form is sent by insurance marketplaces such as Healthcare.gov or a state-based marketplace to individuals who enrolled in a healthcare plan through the marketplace. The 1095-A informs taxpayers of their healthcare coverage status for the year. It is also used to reconcile any premium tax credits made in advance to pay for marketplace insurance or to claim a premium tax credit on a tax return for qualifying individuals.
- 1095-B Health Coverage – This form is sent to individuals by healthcare providers such as non-marketplace insurance companies, government agencies such as Medicare, and smaller employers that offer coverage for their employees. The 1095-B informs taxpayers of their healthcare coverage status for the year.
- 1095-C Employer-Provided Health Insurance Offer and Coverage – This form is sent to individuals who are employed by an applicable large employer (50 or more employees). The 1095-C outlines the healthcare coverage options offered by the employer and the coverage elected or not elected by the employee and dependents. This form informs taxpayers of their healthcare coverage status for the year, and also to determine premium tax credit eligibility for individuals who opted to enroll in marketplace insurance over their employer provided plans.
For most people, the most relevant information in the Forms is whether or not they maintained the minimum essential coverage for all months in the year. If your form indicates a gap in coverage, you may be required to pay the aforementioned annual shared responsibility fee. The fee is increases every year and its either a flat fee or percentage of your income – whichever is greater. For the 2015 coverage year, the flat fee is $325 per adult and $162.50 per child (up to $975 per family) and the percentage is 2% of your household income above the tax return filing threshold for your status. You will owe 1/12th the annual fee amount for each month of the year you did not maintain sufficient coverage. The fees will increase significantly in 2016.
If you are facing fees, it is important to note that there are exemptions for which you may qualify, such as short gap (less than 3 months consecutive non-coverage), general hardships, plan availability, religious beliefs, and others. You should work with your accountant or tax advisor to determine whether you qualify for an exemption or if you believe the information provided in your 1095 form is incorrect.