All of you probably by now have realized the significance of health insurance and must have tried to have proper healthcare coverage to effectively face medical emergencies. But you should also be aware that all taxpayers are expected to report about their health insurance plans while filing a tax return. Therefore, while filing income tax, you will require certain tax forms, as you need to report about your health insurance while filing taxes. Reporting about health insurance plans has become mandatory in the U.S. from the tax year 2015.
Every year, employers, insurance companies, and other offering health insurance are required to inform the Internal Revenue Service (IRS) of who they have covered. Insurers also provide policyholders a Health Coverage Information Statement Form 1095-B or Form 1095-C, as a coverage proof. However, if you are enrolled in coverage through the Marketplace, then you will receive a Health Insurance Marketplace Statement, Form 1095-A. According to the IRS reports, most of you will receive your annual Health Information coverage statement either from the employer or insurer.
Providing Proof of Health Insurance for your Tax Returns
Though Health Insurance Marketplace Statement forms are important, you are not required to wait for the forms to file your taxes. These forms are not required to be attached to your tax return, but provide the information required for filing return, like the total amount of premium paid and the time-frame for which you were covered. The information can be used if you wish to deduct health care expenses and to keep the documents for your records. With the tax penalty no longer being effective, these forms remain useful only for filing tax returns and for claiming tax deductions. Form 1095 contains information about your previous year’s health insurance.
Different Types of Forms
The type of form you receive depends on whether you have a marketplace health insurance plan or employer-sponsored health plan. All the types of forms are discussed below:
If you are enrolled in a Marketplace health plan during the tax year, then you will receive Form 1095-A. This form is an acknowledgment statement issued by either the HealthCare.gov, federal marketplace, or one of the state-run health care exchanges, through which you are enrolled for health insurance coverage. This form also includes information related to the policy like:
- Premium Amount
- Coverage effective date
- Number of Dependents included in the policy
- If there are any advance payments from premium tax credits
If you are enrolled in an employer-sponsored health insurance plan, then you will receive Form 1095-C. This form is an acknowledgment that you participated in an employer-based health insurance plan. Besides, this form also provides information related to the policy and the members who are covered under the plan. Companies having 50 or more employees generally have such health plans, and employees have a choice to obtain the plan or not. Whether employees are participating in their health plans or not, companies are required to report to the IRS. This form is sent to the employees so that they can keep their tax records. This form also doesn’t need to be attached to the tax return.
If you receive health insurance from health care providers, government agencies, and smaller employers, then you will receive Form 1095-B. You also receive Form 1095-B, if you have bought health insurance coverage from a health insurance carrier outside the marketplaces or you have participated in a government program like CHIP or Medicare. Individuals who do not receive either a Form 1095-A or Form 1095-C receive a Form 1095-B.
Deadlines for Receiving Form 1095
The deadline for receiving Form 1095-A, from the marketplace health insurance provider is January 31, and the deadline to receive form 1095-B and 1095-C from insurers, companies, and government agencies has been extended to March 4. You need to have 1095 Forms, as these documents help you calculate deductions and to hassle-free complete filing for your tax. It means you don’t have to wait for the documents to file your tax return.
Importance of 1095 Forms for Filing Tax Returns
If you pay for your marketplace health insurance plan using premium tax credits, then these are listed on your Form 1095-A. You can reduce your monthly health insurance premium with an advance premium tax credit. When filing your tax return, the total credits and related details are required because of the differences between what you used and the amount you are eligible for the need to be reconciled. Check the form 1095-A to reconcile the information. If you have used fewer credits than you were eligible, then you would receive a tax refund on the difference, and if you have used more than you were eligible, then you would owe additional tax on the difference between the two amounts.