Alright, let’s dive into Form 1095-A. It sounds complicated, but it’s actually pretty straightforward once you understand what it’s all about. Think of it as your receipt for health insurance if you got it through the Marketplace.
What is the Health Insurance Marketplace?
Before we dig into the form, let’s briefly talk about the Health Insurance Marketplace (also called the exchange). This is where you can shop for health insurance plans if you don’t get coverage through your job, Medicare, or Medicaid. The Marketplace offers a variety of plans, and you might even qualify for financial help, like the premium tax credit, to make insurance more affordable.
Form 1095-A: Your Key to Tax Time
Now, Form 1095-A is a vital document if you got your health insurance through the Marketplace. It’s essentially a summary of your health insurance coverage and any financial assistance you received during the year. You will need it when you file your taxes.
Why You Receive Form 1095-A
You get this form if you or someone in your household purchased health insurance through the Marketplace. It’s sent to you by the Marketplace, not your insurance company. Keep an eye out for it usually by the end of January each year.
Understanding the Information on Form 1095-A
Let’s break down what you’ll find on the form:
- Your Basic Information: The form will start with your name, address, and Social Security number or Taxpayer Identification Number (TIN). It will also have the same information for your dependents who are covered by the policy.
- Coverage Period: This section tells you the months your health insurance policy through the Marketplace was active. This may not be the full calendar year if you got a plan mid-year, or stopped it before the year ended.
- Monthly Enrollment Premiums: This shows the full monthly premium for your plan before any discounts or financial assistance.
- Premium Tax Credit Information: This is the critical part. If you qualified for the premium tax credit (a subsidy to help lower your monthly insurance costs), the form shows the amount of the tax credit you received each month.
- Second Lowest Cost Silver Plan (SLCSP): The form will include the monthly premium of the second-lowest-cost silver plan in your area. This is important because it is used to calculate your Premium Tax Credit if you did not claim all of your advance premium tax credit for the year.
- Enrollment Policy ID: This section shows the identification number for your health policy.
How the Premium Tax Credit Works
The premium tax credit is a government subsidy that helps make health insurance more affordable. When you apply for insurance on the Marketplace, you can choose to have the tax credit paid in advance. This lowers your monthly premium payments. However, this is an estimate based on your projected income. At tax time, the IRS will compare what you predicted with what your actual income was.
Why Reconciliation is Necessary
The IRS needs to ensure you received the correct amount of tax credit throughout the year. This comparison is called “reconciliation.”
- If your income was lower than you projected, you might be entitled to an additional tax credit. This will reduce the amount you owe on your taxes, or might result in a larger refund.
- Conversely, if your income was higher than you projected, you may have received too much of a tax credit and may owe some of it back to the IRS.
Form 8962 and Reconciliation
To do this reconciliation you will need Form 8962, Premium Tax Credit, with Form 1095-A. Form 8962 uses the information from Form 1095-A to figure out the correct amount of premium tax credit you should have received. This is part of your income tax return.
What If You Didn’t Get a Form 1095-A?
If you got your insurance through the Marketplace and haven’t received Form 1095-A by mid-February, don’t panic. Here’s what you should do:
- Check Your Marketplace Account: Log into your Health Insurance Marketplace account. Often, you can download a copy of your form there.
- Contact the Marketplace: If it’s not there, call the Marketplace help center. They can often mail you another copy or provide it electronically.
- Verify Your Address: Double-check that the Marketplace has your current mailing address.
- Don’t Delay Tax Filing: While you need this form, it’s best to seek a copy before delaying your tax return, or you might risk penalties.
Common Mistakes to Avoid
- Ignoring the Form: The biggest mistake is ignoring Form 1095-A and not reconciling your premium tax credit. This can cause major issues with the IRS.
- Incorrect Information: Always double-check the information on the form for accuracy, and contact the Marketplace right away if there are any errors.
- Using an Old Form: Be sure you are using the current form for the tax year you are filing.
- Not filing Form 8962: Remember that form 1095-A is used with Form 8962 to reconcile the premium tax credit. Missing this reconciliation will impact your taxes.
- Assuming you owe money: Many taxpayers assume they will owe the IRS when they see Form 1095-A. This may not be the case. By completing Form 8962 and doing the reconciliation, you may even receive additional funds in the form of a tax refund.
Pro-Tips
- Keep Records: It’s a good idea to keep copies of all your tax documents, including Form 1095-A, for at least three years.
- Seek Professional Help: If you are confused or unsure about your Premium Tax Credit or Form 1095-A, seek help from a qualified tax preparer or accountant.
- File Taxes on Time: If you are using Form 1095-A, filing on time avoids any penalty issues.
In Summary
Form 1095-A is your proof of health insurance purchased through the Marketplace. It’s essential for correctly filing your taxes, especially if you got help paying for your health insurance via the premium tax credit. Don’t ignore it, be sure to reconcile, and if you have questions, seek help. This is the key to making sure you’re all set with the IRS and your healthcare.