I’m proud to say that I filed my federal and state taxes over the weekend. It wasn’t fun, but Turbotax made it painless. The hardest part was gathering all of the various documents I needed to fill in the boxes as the software walked me through everything. You know, the W-2s from employers, the various 1099 forms for miscellaneous income, dividends, and interest, and the statements from various non-profit organizations with records of charitable contributions. These are the standard things most people have. But this year there was a new form. A 1095 form with information about my health insurance coverage. Mine was a 1095-C, because I happen to work for a large employer, but there also 1095-A and 1095-B forms. So, what are these forms about?
The first thing you’re probably thinking, if you’re like some of the anti-ObamaCare (and, well, just plain anti-Obama) folks I know is that this means you’re going to have pay taxes on your health insurance. Let me stop you right there. That’s NOT what any of these forms, be they A, B, or C, are about. However, there IS a chance that you’ll have to pay more taxes depending on what the forms say, so now is the time to pay close attention: The forms are simply documentation of your (and your family’s) health insurance coverage for 2015.
Form 1095-A has actually been around for a year, corresponding with the roll out of the health insurance Marketplace established nationwide by ObamaCare. So, if you had coverage through either the Marketplace operated in your state, this year is likely the second year you’ve seen this “new” form. Forms 1095-B and 1095-C are new this year though. They are sent to individuals with employer-sponsored health insurance. The B forms go to employees of small employers, while, as I mentioned already, the C forms go to employees of large employers.
And you’re not the only one who receives a copy of the form. A copy is also furnished to the IRS. However, you don’t have to submit the form with your taxes. Just keep a copy for your records in case you get audited. If you had insurance in 2015, you check a box on your tax return that attests to that, and you’re done. No taxes on your health insurance coverage and nothing else to do.
On the other hand, if you DIDN’T have health insurance in 2015, you’re going to have to ante up. Remember the individual mandate? Yeah, that one. If you have affordable insurance options available to you and you do not obtain coverage, you are subject to paying a penalty. The penalty was in effect last year, too, so this isn’t necessarily news. What may be news to those who haven’t been paying close attention is that the penalty is getting steeper. This was done by design–phased in to soften the blow for folks as they got accustomed to the requirements of the new law. If you (or your family) didn’t have insurance in 2015, you’ll pay the higher of 2.5% of household income or $695 per adult and $347.50 per child up to a maximum household cap of $2,085. That’s more than double the penalties from last year in some cases, and that’s the idea. Uncle Sam assumes that maybe if it stings enough, you’ll give in and decide to get covered.
And there’s one more thing: If you didn’t have health insurance coverage for some or all of 2015, you may still qualify for an exemption from the penalty. Healthcare.gov has a nifty little tool that can show you any exemptions for which you qualify. Access it here.