Affordable Care Act (ACA)
For most tax payers this year will be the first time the ACA may have an impact on your personal tax returns. The ACA includes the individual shared responsibility provision, which requires individuals to have qualifying health care coverage for each month of the year, qualified for a coverage exemption, or make a shared responsibility payment when filing their federal income tax returns. For purposes of the ACA, qualifying health care coverage is also called minimum essential coverage. Most taxpayers already had minimum essential coverage prior to the start of the year and only had to maintain that coverage during the entire year. If taxpayers and their dependents had minimum essential coverage for each month of the year, the taxpayer will simply check a box indication that coverage when filing the federal income tax return. No further action is required. Taxpayers or any dependents that did not maintain minimum essential coverage for each month of their tax year and do not qualify for a coverage exemption must make an individual shared responsibility payment with their federal tax return.
For the tax year ending on December 31, 2014 a series of new forms have been introduced to verify coverage, calculate the premium assistance credit and determine applicable of the shared responsibility penalty. Forms that will be needed by taxpayers this year to complete their individual tax returns include:
1. Form 1095A this form is used to report certain information to the IRS about individuals who enroll in a qualified health plan through the Marketplace. Form 1095A also is furnished to individuals to allow them to claim the premium tax credit, to reconcile the credit on their returns with advance payments of the premium tax credit and to file an accurate tax return. This form will list individuals covered, and dates of coverage
2. Form 1095B this form will be issued by insurance companies and discloses the individuals covered along with the dates of coverage. This Form 1095-B provides information needed to report on your income tax return that you, your spouse, and individuals you claim as dependents had qualifying health coverage (referred to as “minimum essential coverage”) for some or all months during the year. Individuals who do not have minimum essential coverage and do not qualify for an exemption may be liable for the individual shared responsibility payment.
Minimum essential coverage is a health care plan or arrangement specifically identified in the law and includes government-sponsored programs (Medicare Part A; Medicaid: Children‘s Health Insurance Program; TRICARE; etc.) eligible employer-sponsored plans, individual market coverage, grandfathered health plans, and miscellaneous coverage designated by the Department of Health and Human Services.
3. Form 1095C this Form 1095-C includes information about the health coverage offered to you by your employer. Form 1095-C, Part II, includes information about the coverage, if any, your employer offered to you and your spouse and dependent(s). If you purchased health insurance coverage through the Health Insurance Marketplace and wish to claim the premium tax credit, this information will assist you in determining whether you are eligible. For more information about the premium tax credit, see Pub. 974, Premium Tax Credit (PTC).
In addition, if you, or any other individual who is offered health coverage because of their relationship to you (referred to here as family members), enrolled in your employer’s health plan and that plan is a type of plan referred to as a “self-insured” plan, Form 1095-C, Part III provides information needed to report on your income tax return that you or those family members had qualifying health coverage (referred to as “minimum essential coverage”) for some or all months during the year.
Employers are required to furnish Form 1095-C only to the employee. As the recipient of this Form 1095-C, you should provide a copy to any family members covered under a self-insured employer-sponsored plan listed in Part III if they request it for their records.
4 Form 8965 Health Coverage Exemptions use form 8965 to report a coverage exemption granted by the Marketplace or to claim a coverage exemption on your tax return.
For a limited group of taxpayers – those who qualify for, or received advanced payments of the premium tax credit the health care law could affect the amount of tax refund or the amount of money they may owe when they file their 2015 returns.
If you do not have qualifying coverage or an exemption for each month of the year, you will need to make an individual shared responsibility payment when you file your return for choosing not to purchase coverage.
If you benefited from advance payments of the premium tax credit, you must file a federal income tax return. You will need to reconcile those advanced payments with the amount of premium tax credit you’re entitled to based on your actual income. As a result, some people may see a smaller or larger tax refund or tax liability than they were expecting.
For further information see IRS Publication 5187