As the 2016 filing season gets underway, many individuals will be receiving new information returns from their employers and/or health insurance providers. The information returns reflect new reporting requirements put in place by the Affordable Care Act. Some taxpayers will need to wait to file their returns until they receive their information returns, but most taxpayers will not. (more…)
Posts tagged ‘Form 1095-A’
The U.S. Treasury Department has announced relief for individuals who may have received overpayments of the Code Sec. 36B premium assistance tax credit based on incorrect information from the Health Insurance Marketplace. Affected taxpayers will not need to refund any overpayment, the Treasury Department explained.
The Affordable Care Act generally requires individuals to have minimum essential health insurance coverage or make a shared responsibility payment, unless exempt. All individuals who enrolled in minimum essential coverage through the Health Insurance Marketplace for 2014 received Form 1095-A, Health Insurance Marketplace Statement, describing their coverage and the amount, if any, of advance payments of the Code Sec. 36B premium assistance tax credit. Only individuals who obtain health insurance through the Health Insurance Marketplace may claim, if eligible, the Code Sec. 36B premium assistance tax credit.
The Code Sec. 36 premium assistance tax credit for the entire year is computed based in part on an individual’s monthly premium for the applicable second lowest cost silver plan (SLCSP). In February, the U.S. Department of Health and Human Services (HHS) reported that it had issued some 800,000 incorrect Forms 1095-A. The incorrect forms referenced Marketplace benchmark plans for 2015 rather than 2014. The incorrect forms accounted for approximately 20 percent of taxpayers who received insurance through the Health Insurance Marketplace, according to HHS. The Marketplace has been contacting affected individuals, who will receive corrected Forms 1095-A.
If the taxpayer has already filed a return for 2014 and received a higher Code Sec. 36B premium assistance tax credit as a result of the error, the taxpayer may keep it, the Treasury Department explained. The IRS will not pursue collection action against that taxpayer. If, due to the error, a taxpayer who has already filed a 2014 return received a lower credit than he or she was entitled to receive, the individual may amend the tax return, the Treasury Department added.
Form 1095-A, Health Insurance Marketplace Statement, is a new information return. The IRS requires the Health Insurance Marketplace to report certain information about every individual who receives health insurance coverage through the Marketplace to the agency and also to the enrollee. Form 1095-A reports information about the individual(s) covered by Marketplace coverage, the starting and ending dates of coverage, and the insurer that provided coverage. Form 1095-A also reports the cost of coverage, the plan’s total monthly payment, any advance payment, and more.
Copies to IRS and enrollees
IRS rules require the Marketplace to file Form 1095-A with the agency and provide a copy to individuals on or before January 31, 2015, for coverage in 2014. If an individual did not receive a Form 1095-A in February 2015, he or she should contact the Marketplace and not the IRS. The IRS has cautioned that it is unable to answer questions about the information on Form 1095-A or about missing or lost forms because these forms come from the Marketplace.
Health insurance obtained through the Marketplace satisfies the requirement under the Patient Protection and Affordable Care Act (PPACA) that all individuals carry minimum essential health coverage, unless exempt. On 2014 Form 1040, U.S. Individual Income Tax Return, the IRS has added a new line on which individuals will report if they had minimum essential coverage for 2014 (and on Forms 1040-EZ and 1040A). Individuals who had coverage through the Marketplace for 2014 will check this box on their Form 1040.
Code Sec. 36B credit
According to the IRS, nearly nine out of 10 individuals who obtained health insurance coverage through the Marketplace in 2014 qualified for the Code Sec. 36B premium assistance tax credit. This credit helps to offset the cost of health insurance. Form 1095-A includes information about the credit that individuals will need when they file their returns, such as the second lowest cost Silver Plan.
All individuals who claim the Code Sec. 36B credit must file a return. The IRS has developed a special form (Form 8962, Premium Tax Credit) for individuals to file with their return.
Many enrollees in Marketplace coverage were likely eligible for advance payments of the credit to their insurer. In this case, these individuals must reconcile the amount of the advance payment with the amount of the actual credit when they file their 2014 returns. Keep in mind that that changes in income, family size or other life events may result in the amount of the actual credit being different from the amount estimated by the Marketplace at the time coverage was obtained. If an individual’s actual allowable credit is less than the amount of advance credit payments, the difference, subject to certain caps, will be subtracted from any refund or added to any balance due. If the actual allowable credit is more than the advance credit payments, the difference will be added to any refund or subtracted from any balance due.
In late February, the U.S. Department of Health and Human Services (HHS) announced that some 800,000 Forms 1095-As reporting coverage for 2014 were calculated incorrectly by the Marketplace. HHS has advised enrollees that they should receive corrected Forms 1095-A in early March. If you have any questions about your Form 1095-A please contact our office.