This is the 2nd tax-filing season in which Americans tackle the tax implications of the Affordable Care Act, or ACA.
The health care law popularly known as Obamacare still requires that everyone be covered by an ACA-acceptable health care policy. If ignored, uncovered individuals face a tax penalty, which increases sharply in 2016.
For most taxpayers, the IRS' ACA requirement simply involves checking a new box on tax returns. Others have received a new tax reporting document and must complete added forms or work sheets.
Here's a look at 9 pieces of Obamacare tax paperwork that many taxpayers are likely to encounter.
9 tax forms that deal with the Affordable Care Act
3 returns, 3 ACA coverage lines
For each tax year, individuals must obtain ACA-approved health care coverage or qualify for an exemption from coverage. If you do neither, you will face a penalty, known as the shared responsibility payment. Each of these situations is accounted for on each of the 3 individual tax returns.
If you had ACA-required health care, known as minimum essential coverage, for all of the tax year for yourself, your spouse (if filing jointly), and anyone you could or did claim as a dependent, you simply check the box next to the "full-year coverage" notation on this line and leave the amount section empty.
The check-the-box option is found on:
|Form 1040||Line 61|
|Form 1040A||Line 38|
|Form 1040EZ||Line 11|
Simply checking the box applies to the millions of Americans who have health care coverage through work or who are insured under a variety of other approved programs, such as Medicare, Medicaid or the military.
This easiest of Obamacare tax tasks will be accomplished by most taxpayers, according to the IRS.
Form 1095-A for exchange policies
You also can check the tax return box if you purchased a policy through the marketplace, either HealthCare.gov or a state exchange. Buyers of this type of coverage, however, also must do a bit more tax work.
Exchange policy purchasers will have received Form 1095-A, Health Insurance Marketplace Statement. It should be delivered to affected taxpayers by early February.
The 1095-A shows, among other things, any amount of premium tax credit the policy purchaser received in advance to help pay for the coverage. Using that information, the taxpayer will calculate whether he or she got the correct advance premium credit.
If too large a credit was paid in advance, the taxpayer will lose some expected refund or owe a larger tax bill.
2 new Obamacare 1095 forms
Beginning with the 2016 filing season, some taxpayers will get new forms.
Form 1095-B is issued by health care insurance issuers or some smaller companies that provide coverage for their workers. It confirms that you, your spouse (if you file a joint return) and your dependents had at least minimum qualifying health insurance coverage for some or all months of the prior tax year.
Form 1095-C is issued by large employers to their employees, notifying the workers that they, their spouses (if filing jointly) and dependents had minimum essential coverage for all or part of the prior tax year.
Both the B and C versions of the 1095 provide verification of coverage that helps the covered individuals, and their families, avoid paying the tax penalty, known as the shared responsibility payment, for not having coverage.
Similarities, differences in the 1095s
All 3 different Form 1095 health care statements provide information about your health coverage during the prior year.
Each is helpful in determining whether you, your spouse and your dependents had health coverage for the entire year and, if not, for which months you did have coverage. You could owe a penalty for the uncovered months.
While the information on a 1095-A issued by the marketplace is necessary to claim the premium tax credit, that's not the case for the B and C versions. If you get your insurance coverage directly from an insurer outside the marketplace or through your workplace, you are not eligible for the premium tax credit. The 1095-B and 1095-C data are purely informational.
Some taxpayers could get a combination of all 3 types of 1095 forms. This could happen if you had marketplace coverage, then got a job at a company that provided health coverage. Multiple 1095 forms also could arrive if you changed jobs during the year or if different members of your family received health care from different sources.
And none of these 1095 forms should be filed with your tax return. All, however, should be kept for your records with your other tax documents.
Form 8962 premium tax credit calculations
Form 1095-A recipients will use information from that form to determine whether they owe for an advance premium tax credit overpayment. The amount due is figured on Form 8962, Premium Tax Credit.
This form also is used by taxpayers to claim the premium tax credit if they didn't get it when they purchased their marketplace policies.
Explaining ACA exemptions
Some individuals do not have to worry about ACA coverage. They qualify for exemptions from the health care law.
These individuals will explain their exemption status on Form 8965, Health Coverage Exemptions.
ACA exemptions are granted for individuals who:
- Didn't make enough to require they file a return.
- Could not find affordable coverage.
- Are living abroad.
- Or experienced a hardship that prevented them from obtaining coverage under a qualified health plan.
The instructions for Form 8965 have a complete list of ACA exempt situations.
If you are required to file a tax return and want to claim a coverage exemption, attach Form 8965 to your tax return.
Shared responsibility payment
Finally, if you did not have ACA-acceptable health care coverage for all or part of 2015 -- which should be shown on one of the 1095 forms you receive -- and are not exempt, you must pay a penalty.
The 2015 tax year penalty is $325 per adult and $162.50 per child, up to a maximum $975 for a family, or 2% of a portion of your household income, whichever amount is larger. For 2016, the fine increases to $695 per adult, $347.50 per child (a family maximum of $2,085) or 2.5% of a portion of your yearly household income -- again, whichever is greater.
The penalty is assessed on a monthly basis, meaning you could owe a portion of the penalty for every month that you or your family members were without coverage.
You figure your precise penalty amount using the shared responsibility payment work sheet in the Form 8965 instruction book.
Once you find what you owe for not having required minimum health care coverage, the tax-filing process circles back to your individual tax return.
Find the check-the-box line of your tax return. There you'll use the entry section at the far right of line 61 on the 1040, line 38 on the 1040A or line 11 on the 1040EZ to enter your shared responsibility payment amount from the work sheets.