The provisions of the Affordable Care Act were designed to take effect over the course of several years. The penalty for not having health insurance coverage is assessed on income tax returns, so the number of related tax forms has increased in recent years. In early 2016, individuals may receive one or two new forms necessary to complete their 2015 income tax returns.
The Affordable Care Act, also known as the ACA, first affected income tax returns prepared for the 2014 calendar year. One of the first ACA forms to impact tax returns was IRS Form 1095-A, a document provided by health insurance companies to individuals who obtained coverage through the ACA marketplace. The marketplace is the term used collectively for all the insurance companies that sell and provide ACA coverage.
Form 1095-A is used to reconcile your tax return with any ACA subsidy received through the marketplace. The two new forms are intended to be used by other providers of health insurance coverage. One of the new forms is for larger employers that provide health insurance to their workers. The other new form is for the remainder of qualified health care providers outside of the marketplace.
Companies that offer health insurance and have 50 or more employees working full-time are now required to issue a Form 1095-C to each full-time employee. The form indicates which months of the year that health insurance coverage was provided by the company. If you have a spouse or dependents included in your coverage, their information is on the form also.
Businesses with less than 50 full-time employees sometimes provide health coverage as a fringe benefit. Those smaller employers are now required to issue IRS Form 1095-B to employees who receive health coverage. Form 1095-B is also issued by government health programs and private insurance providers to insured persons.
The ACA applies to every individual included on your tax return. Forms 1095-A, 1095-B, and 1095-C all indicate which months of the year each insured individual had minimum coverage. You may have multiple forms for the entire year. Although the financial penalty for not having health coverage is calculated on a monthly basis, there are numerous exceptions to the penalty.
Along with the new tax forms, the potential ACA penalty increases each year as the provisions in the law continue to take effect. Contact an accounting firm like Herman & Cormany for more information about the impact of the Affordable Care Act on your personal income tax return.