Your tax return may be affected either by the individual shared responsibility payment or the premium tax credit under the ACA law. Taxpayers will receive information forms regarding their health coverage plan that they can use to complete their tax return. These information forms will help you report your health coverage for you and your tax household when you file your tax return.
The health coverage information forms are:
- Form 1095-A, Health Insurance Marketplace Statement: You will receive this form if you purchased a health care plan through the Marketplace. The form will contain information about the health coverage, who was covered, and when.
- Form 1095-B, Health Coverage: You will receive this form via your health insurance provider and it will contain information on who was covered in the plan and when.
- Form 1095-C, Employer-Provided Health Insurance Offer and Coverage: You will receive this form if you are self-insured through your employer. This form will contain information about who was covered and when.
Below are key elements regarding the information forms:
- February 1, 2016 was the deadline for the Health Insurance Marketplace to provide Form 1095-A.
- March 31, 2016 is the deadline for health care providers to provide Forms 1095-B and employers to provide Form 1095-C.
- You should wait until you receive Form 1095-A, if you are expectant of receiving this form, to file your 2015 income tax return.
- It is not necessary to wait to file your tax return if you have not received Forms 1095-B or 1095-C.
Individual Shared Responsibility Provision (ISRP)
When filing your income tax return, the ACA law requires individuals to have health care coverage, qualify for a health coverage exemption, or make an Individual Shared Responsibility Payment. If you maintained health coverage for the entire year, you will simply check a box on your tax return.
Below are key elements of the ISRP:
- You may qualify for an exemption if you don’t have health coverage and meet certain criteria. Most exemptions can be claimed when you file your tax return, but some must be claimed through the health insurance Marketplace.
- To apply for an exemption from the health insurance coverage penalty, you will complete Form 8965 when filing your tax return. Form 8965 is used to report a coverage exemption granted by the Marketplace, or to claim a coverage exemption on your tax return. However, if you are not required to file a tax return, you do not need to file a return just for the purpose of reporting your coverage or to claim an exemption.
- For any months an individual does not have health insurance coverage or qualify for an exemption, the individual must make an Individual Shared Responsibility Payment. If you do not qualify for an exemption and were able to afford health care for you or any dependents but chose not to get it, you will have to make a payment. See more information on how the health care tax penalty could cost you.
Health Coverage Exemptions
The ACA law requires you and each member in your household to have minimum essential coverage, qualify for a coverage exemption, or make an individual shared responsibility payment (ISRP) for the time without health care coverage when you file your federal tax return.
Individuals who qualify for a health coverage exemption are not required to pay the ISRP. ISRP payment will be required for any period of time the individual was not considered exempt from health insurance coverage.
When you are ready to file your tax return, you can claim most exemptions directly on your tax return. However, for certain exemptions, you must apply through the Marketplace.
You may be exempt if:
- Your annual premiums are more than 8.05% of your household income.
- You have a gap in health care coverage that is less than 3 consecutive months.
- You have had a hardship that may stop you from obtaining coverage, or belong to a group that is exempt from the ACA requirement.
See if you may qualify for a coverage exemption using our online health exemption tool page.
Premium Tax Credit
For an explanation on how to claim the Premium Tax Credit see our blog, “How To Claim The Premium Tax Credit & Reconcile Advance Credit Payments.”
To find a Liberty Tax® ACA Advisor at your local Liberty Tax® office, call 800-673-8600 or visit www.healthcaretaxinfo.com