A new tax form demonstrating proof of the purchase of health insurance for 2015 is not required to be mailed in when consumers are filing their taxes this year.
While taxpayers do not have to include form 1095 when they submit their return, the document ensures that individuals met the Affordable Care Act’s requirements that they purchased health care coverage. Tax penalties apply to consumers if they did not purchase coverage. “By now, everyone knows that the Obamacare law requires most of us to have health insurance,” he said. “What most people don’t know is how the requirement to have coverage is enforced and what it can mean for your federal tax return.”
The form, which can appear in three versions as 1095-A, 1095-B or 1095-C, depends on whether you bought coverage on your own, received tax subsidies or got it through an employer. Consumers who purchased insurance through one of the federal or state healthcare marketplace such as healthcare.gov will receive a 1095-A, while people who bought it from insurance companies will be mailed the 1095-B. Form 1095-C is mailed to people who received coverage from their employer or those companies with 50 or more full-time employees.
Tax Penalty
Consumers who only missed coverage for a month or two do not have to pay the penalty. Having a significant gap in health insurance coverage, which is reflected in your form 1095, means you should be prepared to pay the tax penalty of $325 per adult or the greater of 2% of your taxable household income.
The subsidies lowered the amount consumers paid each month for their premiums, making them affordable. Consumers need to determine whether the advanced tax credit payments they received were too little or too high, based on their income and other filing details, said Ryan Saltz, a licensed tax professional with Tax Defense Network, a Jacksonville, Fla.-based tax resolution company.
“Alternatively, you may not have taken advanced payments and might need to determine how much you should be getting back in the form of a premium tax credit,” he said. “You may find that filing a tax return is cumbersome, tedious and complicated. The good news is that there’s an excellent chance that these forms will have little impact on your actual filing experience.”