Do you know how to report your health insurance on your tax form? It’s required and it can be complicated, but we have all the info…
April 15 is tax day, and that means it’s your last chance to make sense of some new forms that probably came your way in recent months. As most people know, the Affordable Care Act (otherwise known as the ACA, or “Obamacare”) calls for all taxpayers to have qualifying health insurance coverage for each month of the year. Those who do not have health insurance must either pay a fine or claim an exemption from the requirement. Most people are in the first category, and will simply check a box on their tax return to indicate that everyone listed on their taxes had qualifying coverage for the entire year. Let’s discuss this group first, and then we’ll talk about what to do if you were uninsured last year.
PEOPLE WHO HAD HEALTH INSURANCE
People who had insurance in 2015 will receive a form showing what type of insurance they had. These forms, known as a Form 1095-A, 1095-B or 1095-C, are similar to a W-2 in that they contain important information for a tax filer to reference, but the forms do not have to be submitted to the IRS. Which form someone receives depends on the type of health coverage he or she had. Some people will receive one, two or all three of these forms, depending on how many different types of coverage they had. Here are some types of coverage.
Union-sponsored or employer-sponsored health insurance (like the Local 802 health plan). Most Americans under the age of 65 receive health insurance through an employer. These people will be provided with a Form 1095-B or 1095-C from their (or their spouse’s) employer. Please note, 1095-B and 1095-C filers do not need to wait to receive these forms to file. In fact, some employers might be very slow to give them to employees this year.
Medicare, Medicaid or CHIP. More than 30 percent of Americans have health insurance coverage through Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP). These individuals will receive Form 1095-B. People who have Medicaid or CHIP will receive the form from the state agency that oversees Medicaid and/or CHIP, and individuals with Medicare will receive a 1095-B from Medicare. If you enrolled in Medicaid or CHIP through the New York State of Health website and you haven’t received your 1095-B, you can call (855) 766-7860. As a reminder, this form is not needed to file your taxes.
Health insurance through the ACA/Obamacare. People enrolled in one of the ACA/Obamacare “marketplace” health plans (through HealthCare.gov or a state plan) for all or part of 2015 will receive a 1095-A from their marketplace. The form will be sent in the mail and will also be available to most consumers online through their marketplace accounts. This form contains information you need to report the advanced premium tax credits (APTCs) you received in 2015. More on this below. You should wait to file your taxes until you receive this form! If you have not received your 1095-A form yet, you should contact the marketplace from which you received coverage. In New York, call (855) 766-7860.
SPECIAL NOTE: If you received financial assistance or subsidies through your ACA/Obamacare health insurance. Consumers who received Advanced Premium Tax Credits (APTCs) will see the amount of tax credits they received on their 1095-A. This information is necessary to complete Form 8962, Premium Tax Credit, which is used to “reconcile” your APTCs. Those who received APTCs must reconcile the amount they received (based on their estimated income for the year) with what they were ultimately eligible to receive (based on their actual income for the year).
For example, Juan is a single musician who lives in Astoria. He was enrolled in a plan through the Marketplace for 12 months. When he signed up for coverage, he thought his 2015 income would be $28,000, which made him eligible for an APTC of $111 per month (or $1,332 per year). But this is the music business, and it’s always hard to estimate your income! When Juan completes his federal tax return, he realizes his actual income was $22,000. He would have been eligible for an APTC of $185 per month (or $2,220 per year). So, he gets a tax credit of $888 to “reconcile” the difference.
What if Juan had estimated his income would be $22,000, but it turned out to be $28,000? In this situation, you would think he would owe the government $888. However, there are limits on the amount that has to be repaid if your household income is below 400 percent of the federal poverty level. In this case, Juan only owes $750. If you live in New York and you think the state made a mistake on your 1095-A form, call (855) 766-7860.
PEOPLE WHO DIDN’T HAVE HEALTH INSURANCE
If you did not have insurance in 2015 and you meet certain criteria, you may be able to file for an exemption from coverage. How you file for an exemption depends upon the type of exemption. Some exemptions can be obtained only from www.HealthCare.gov (or your state marketplace); other exemptions are claimed only when you file your tax return.
Here are the most common types of exemptions in our industry: 1) You went without coverage for less than three consecutive months during the year; 2) Your insurance through your job or union was too expensive. The government defines “too expensive” (for 2015) as costing you more than 8.05 percent of your actual household income; 3) Your gross income is less than the tax filing threshold. 4) You lived in a foreign country for at least 330 full days during any period of 12 consecutive months. There are other exemptions as well; to see the full list, and find out how to apply, visit www.HealthCare.gov/health-coverage-exemptions/exemptions-from-the-fee.
If you did not have insurance and you are not eligible for an exemption, you have to pay a fine, known as the “individual shared responsibility payment.” The amount varies depending on household size, income, and length of time uninsured. The minimum fine for 2015 is $325 per person.
If you’re having trouble figuring all this out, there are tax preparers who can help you file your taxes for free. In New York City, visit www.tax.ny.gov/fsa. In other areas, visit www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers.
Renata Marinaro is the director of health services in the Eastern region at the Actors Fund. Reach her at Rmarinaro@ActorsFund.org. Some resources in this article came from www.healthcare.gov, www.nystateofhealth.ny.gov, www.familiesusa.org and www.irs.gov.