As you know by now, the Affordable Care Act of 2010 is now in full swing and under
the general rule every American is required to have medical insurance coverage which satisfies the rules under what is defined as “essential minimum coverage.” In summary, “essential minimum coverage” means that the policy has no annual or lifetime coverage caps; cannot deny coverage because of a pre-existing condition, provides access to the emergency room, allows for an annual physical and assessment of the insured’s health status, allows for testing for breast cancer, ovarian cancer, etc. and allows for a colonoscopy.
The most important issues about these coverages and mandates is that reporting about your coverage is required on your federal income tax return each year. If a taxpayer has coverage through one of the State Exchanges or the Federal Marketplace then they are required to be issued an IRS Form 1095-A “Health Insurance Marketplace Statement” from the agency through which they obtained the coverage. The rule states that the taxpayer is to receive the form no later than January 31, 2017 for the 2016 coverage year. Note, however, that the IRS has recently extended the due date for the Forms 1095-B and 1095-C until March 2, 2017 so you may receive the forms after January 31st. If you obtained your 2016 coverage through the State Exchange or Federal Marketplace then please make sure that you give me a copy of the Form 1095-A when you present your 2016 tax information to me for preparation of your 2016 tax return.
The Form 1095-A will provide the needed information to determine if you are eligible for any premium tax credit, if you received any advanced premium tax credit and who in your household was covered under this policy. The information will also determine if you will be eligible to receive additional premium tax credits or if you must repay some or all of the advanced premium tax credits that you received in each month that you obtained coverage through the State Exchange or Federal Marketplace.
If you have individual coverage through a private insurance policy purchased on the open market or under a government sponsored plan during 2016 then you should be receiving an IRS Form 1095-B titled “Health Coverage” no later than March 2, 2017. You will need to include a copy of this document to me for use in preparing your 2016 income tax return. This will be issued to you by your insurance carrier, government sponsored plan or could also be issued by the group plan administrator if the coverage is under an employer’s plan. This document is important because it will report the months that your plan met the requirements of minimum essential coverage and everyone in your household who was covered. As a result of this coverage you will not be subject to the “individual shared responsibility payment” (penalty) assessed for not being covered. This penalty is the greater of $695 for up to 3 individuals in your household who are 18 and older or 2½% of your adjusted gross income over the required threshold for filing your return. If you would like to discuss this further please contact me for this and other issues related to health insurance and medical deductions.
There is another IRS form that could possibly be sent to you which is IRS Form 1095-C “Employer-Provided Health Insurance Offer and Coverage.” You could receive this document because you work for an employer who employs 50 or more full-time employees. The form is used to report information about whether the employer made an offer to you for minimum essential coverage for 2016 and whether or not the coverage offered, had value which pays at least 60% of the claims under the coverage and whether it is affordable coverage to you. In addition, if your employer had 50 or more full-time employees and did not offer coverage then the employer also will be required
to provide you with a Form 1095-C if no offer of coverage was made. This form will also be required to be issued to you no later than March 2, 2017. Please provide a copy to me when it is time to prepare your 2016 income tax return.
If you would like to discuss any issues concerning health insurance coverage requirements as it pertains to your tax issues please contact me.