We’ve received quite a few questions regarding 1095 forms during this tax season, and we’re sure you have too. So you can better serve your clients, here’s an overview of what it all means:
Under PPACA, an Individual Penalty was established to incentivize Americans to obtain health insurance coverage. The 1095 form was introduced as a standardized document to report enrollment in a Qualified Health Plan.
The 2017 Tax Cuts and Jobs Act reduced the individual penalty to $0, effectively eliminating it, effective 1/1/2019. Due to this, beginning with the 2019 tax year, IRS tax forms like the 1040 no longer include the question about health coverage.
1095-A comes from the Exchange in mid-February (also available by logging in to the member’s exchange account) and reports any Advanced Premium Tax Credit the member received. This is used to complete Form 8962 and reconcile the subsidy. Accountants will request this, including from clients who aren’t on-exchange.
1095-B comes from the Carrier (usually available in the member portal as well). Now that the individual penalty is gone, it no longer serves any real purpose. It’s basically just a “receipt” for the member’s records and isn’t needed to file taxes.
1095-C comes from a Self-Insured Large Employer, and is generally handled the same as a 1095-B for tax purposes (it’s just a receipt). Because this form confirms the coverage offered by an employer, it can also serve to prove/disprove eligibility for a premium tax credit.
If you’d like to read more on this subject, or would like to refer clients/accountants to the official guidance, the IRS has posted a helpful Q&A on their website.
