Why did I receive a Form 1095?
The Patient Protection and Affordable Care Act (PPACA, or ACA for short) – also known as "Obamacare" – requires every American to have health insurance coverage. If you do not have health insurance or a health coverage exemption, you must pay a penalty (the "individual shared responsibility payment"). You can use IRS Form 1095 to submit proof that you had employer-provided health insurance coverage during the tax year, eliminating the potential of these fines and penalties.
There are two versions of the Form 1095 that you might receive:
What is the purpose of IRS Form 1095-C?
As required by the ACA, each year employers must provide important tax information that you need to complete your federal income tax return. When prepared correctly, IRS Form 1095-C includes all of the necessary information to allow you or your tax preparer to report your health care coverage when completing your tax return.
Form 1095-C includes important tax information, and like all tax information, you should retain this form with your tax records.
Employers are also required to provide a copy of this information to the IRS just like they report an individual’s annual income on IRS Form W2.
Why is Form 1095 important?
IRS Form 1095 includes information that indicates if your employer offered you and your dependents (if any) coverage during the tax year, and if that coverage met the criteria for minimum essential coverage (MEC) and affordability. The form also outlines the months during the calendar year you and your dependents (if any) had coverage under the employer’s health plan.
What is minimum essential coverage?
Minimum essential coverage is the type of coverage you need to have to avoid the penalty for not having health insurance. Many types of coverage qualify, including job-based plans (including retirees and COBRA coverage, Marketplace plans, and Medicare). More information about plans that count as coverage is available on the IRS website.
To comply with the law, you must maintain minimum essential coverage throughout the year (you are allowed gaps of less than three (3) months in a row each year without coverage – called a "coverage gap exemption" - without being subject to the penalty). Minimum essential coverage must meet both the minimum value and affordability requirements.
What is minimum value?
The ACA requires that any health plans offered to you must meet the minimum value standard, which means the plan pays for at least sixty (60) percent of medical expenses on average for a standard population. Most employer-sponsored plans today will easily pass this requirement.
What is affordable coverage?
The ACA requires that health plan coverage offered to you must be affordable as defined by the law. Generally, coverage is affordable if the amount you are required to pay for self-only coverage under the lowest cost plan offered by your employer does not exceed 9.56 percent of your household income for 2018 (this amount is subject to change each year).
What do all the codes mean on Form 1095?
The codes used on Form 1095 tell a story of your coverage scenarios through the reporting year, including:
There are many different codes, and each set of codes will be unique to each individual’s situation.
How many forms will I receive?
Most people will only receive one IRS Form 1095, but there may be instances where you receive multiple forms. For example, if you worked for multiple employers during the course of the tax year, or if you worked for different divisions or subsidiaries of an employer during the tax year, you will receive multiple forms.
Will I owe more taxes because of this form?
No. IRS Form 1095 provides the required proof that you have employer-provided health coverage, exempting you from individual shared-responsibility payments.
Why are covered individuals listed in Part III of Form 1095?
Part III of Form 1095 reflects the individuals covered under the plan (the covered employee and any dependents covered), and indicates which months of the year these individuals had employer-provided health insurance coverage. Listing these individuals in this manner helps tell the complete coverage story to the IRS and can help eliminate any potential penalties for failing to maintain coverage.
What if I am not a "traditional" employee (i.e on COBRA or a retiree)?
The ACA requires every American to have health insurance coverage. If an individual does not have health insurance or a health coverage exemption, they are required to pay a penalty (the "individual shared responsibility payment"). The IRS assesses and deducts the penalty when the individual files their income taxes.
IRS Form 1095 allows an individual to submit proof of having health insurance coverage, eliminating the potential for penalties. Various codes are reflected in Part II of the form to indicate your unique situation, including codes for COBRA qualified beneficiaries and retirees (see "What do all these codes mean?" above for more information).
What if I need to make a change to my Form 1095 information?
If you think information on your Form 1095 is incorrect, please contact your employer’s HR department to find out how to get a corrected Form 1095.
How do I know that I did everything right?
As can often be the case when working with IRS, you likely won’t know if there is an issue until you hear from the IRS. However, if you or your tax preparer file your federal tax return with all of the necessary information, you will likely never hear from the IRS.
What is IRS Form 1095-B?
Employers may offer self-funded coverage (an employer manages the health plan and pays all claims) or fully-insured coverage (the employer pays premiums to an insurance carrier, HMO, or similar entity who pays all claims).
If you have coverage under a fully-insured plan, you will receive a Form 1095-B from your insurance provider that outlines each month of the year that you and your dependents (if any) had qualifying health coverage.
When can I expect to receive my Form 1095 each year?
The 1095 forms distributed in 2019 and beyond must be postmarked no later than January 31st of each year (or the first business day following January 31st if the 31st falls on a weekend).
Where can I get more help if I have additional questions?
Information about the ACA for individuals and families is available on the IRS website.
For more information about Form 1095 visit the IRS webpage about health care forms.
Many people can get free help completing their income tax returns. Visit the IRS webpage about free tax return preparation programs for more information.