Obamacare Paperwork for the 2015 Tax Season

By now, everyone should know there are new tax forms relating to your health insurance, and that you need these new forms in order to do your 2015 income taxes.  You also need these forms in order to avoid (what is essentially) a fine for not having minimum essential health insurance!

The Forms are 1095 A, B, and C.

1095-A is for folks who bought insurance from “the marketplace,” also known as “healthcare.gov.”  It is expected that you will receive it in the mail by January 31, and that you can access this form online through your account at healthcare.gov.  If you have this form, you may be entitled to a tax credit.  Then again, if you did not do your income estimates correctly, you might have underpaid your monthly health insurance premium, and so will have to repay the difference at tax time, via your federal income tax.  These people MUST have Form 1095 A in order to do their taxes.

1095-B is for folks who bought their qualifying health insurance directly from an insurer, and the insurer will send you the form.  Likewise, folks with insurance through a COBRA arrangement should receive Form 1095-B directly from the insurer.  Medicare, Medicaid, Tricare, and children’s health insurance programs should provide you with Form 1095-B.  Finally, if your employer provides health insurance, and your employer has fewer than 50 employees, you are also supposed to get Form 1095-B.  Update!  Your tax preparer is now allowed to use “alternate methods” to confirm that you had health insurance in 2015!

1095-C is only for folks whose employer has 50 or more employees.  Update!  Your tax preparer is now allowed to use “alternate methods” to confirm that you had health insurance in 2015!

Uncertainties:  Will you actually get the form from the employer or from the insurance company?  Will your small employer send you 1095-B while your insurance company sends you 1095-C?  When will you get the form?  Like the healthcare bill itself, we just have to wait and see what happens.  I’m seeing too many disagreements to be more specific at this time.

Mid-year changes:  If your health insurance changed during the year, expect to need multiple forms!  You need to show that you had minimum essential coverage for at least 9 out of 12 months in 2015, with only 1 break in coverage.  (Changed jobs twice with a gap each time?  Could be a problem.)

Fines:  For tax year 2015, the fine is the greater of 2% of household income, or $325 per adult plus $162.50 per child.  (Notice this is household income, not taxable income.  Otherwise untaxed social security benefits and tax-exempt interest are included for purposes of this calculation.)

Exemptions:   Yes.  But way too complicated for this brief article.  Some actually require a formal application, while others are honor system based.  Basically, you have to be living in poverty’s pocket.

Nonetheless, every person listed on your tax return needs to be covered by a Form 1095.  When you get your form, check it for accuracy!  If you are unsure, immediately call your insurance company (or human resources dept).

And make sure to include a copy with your tax documents when you submit them to your preparer!  Update!  Tax preparers can now use “alternate methods” to confirm that you have health insurance, but Form 1095 is by far the most straight forward solution.

Confused?  It’s Tax Season…and we can help!  Give us a call.