Understanding Form 1095-B: Your Guide to Health Coverage Verification
Form 1095-B, officially titled “Health Coverage,” is a key piece of the puzzle when it comes to understanding your taxes and healthcare. It’s a document you might receive each year, but many people aren’t entirely sure what it’s for. Let’s break down what Form 1095-B is all about and why it’s important for you.
Why Does Form 1095-B Exist? A Quick Look at its Background
To fully appreciate the purpose of Form 1095-B, we need to step back a bit. The form came into existence as a part of the Affordable Care Act (ACA), also known as Obamacare. The ACA aimed to make health insurance more accessible and affordable for all Americans. One part of that goal was to make sure everyone had a minimum level of health insurance coverage.
Before the ACA, not everyone had health insurance, leading to issues with healthcare access and financial burdens. With the ACA, most people were required to have what’s called “minimum essential coverage,” or face a tax penalty. While the individual mandate penalty has been reduced to $0, documentation that you had health coverage is still essential. Form 1095-B was designed as a mechanism to help verify that you and your family were indeed covered. It served to confirm you were meeting the requirements of the ACA, or for some, it may have helped you when you filed your tax return and were claiming certain tax credits or exemptions.
The Shift in the Individual Mandate
It’s worth mentioning that while the penalty for not having health insurance under the ACA is now zero, having proof of coverage is still important. States may have different healthcare laws in place, so you should always keep records of coverage.
How Form 1095-B Works: The Nuts and Bolts
Think of Form 1095-B as a receipt for your health insurance. It provides basic information about you, your family members, and the type of coverage you had. Let’s break down what you can expect to see on this form:
- Information about You: This includes your name, address, and Social Security number (or Taxpayer Identification Number).
- Information about Your Insurance Provider: This would be the name and address of the insurance company or the entity providing your health coverage.
- Information about Covered Individuals: This section will list the name, date of birth, and social security number (or Taxpayer Identification Number) of each individual covered under the health plan. This could be yourself, your spouse, or your children.
- Coverage Period: This is the specific timeframe for which you had coverage during the tax year. Usually, it will show you had coverage for the whole year, but it could show only a portion of the year as well.
Who Sends You Form 1095-B?
You won’t receive a 1095-B from every health insurance plan. Here’s a breakdown of who sends them:
- Health Insurance Companies: If you get your health insurance directly from a company (not through an employer), this insurance company will send you the form.
- Government Programs: If you have coverage through programs like Medicaid, Medicare, or Children’s Health Insurance Program (CHIP), these programs will provide the form.
- Some Employers: Certain employers who sponsor health coverage that is considered self-insured plans must send you this form to document coverage.
It’s important to note that most people receive their health insurance through their employer and will usually receive a Form 1095-C, instead of a Form 1095-B.
Key Differences: Form 1095-B vs Form 1095-A vs Form 1095-C
It’s very common to confuse all the 1095 forms. There are three main types, each serving a different purpose:
- Form 1095-A: This form is for those who purchased their health insurance through the Health Insurance Marketplace (also sometimes called the Exchange). You need this form to reconcile the premium tax credit you may have received during the year.
- Form 1095-B: This is the form we’ve been discussing, and it’s used to report minimum essential health coverage provided by various types of plans, like those obtained directly from an insurance company, state and federal government programs, or some self-insured employers.
- Form 1095-C: This form is provided by larger employers (those with 50 or more full-time equivalent employees) to their full-time employees. It shows what type of coverage the employer offered and whether they met the requirements to avoid penalties under the ACA.
Essentially, Form 1095-B focuses on proof of coverage for people covered by other types of health insurance plans besides Marketplace insurance and employer-sponsored plans.
Why Do You Need Form 1095-B?
While the individual mandate penalty is no longer enforced at the federal level, having Form 1095-B is still crucial for a few reasons:
- Proof of Coverage: It serves as proof that you had health coverage for tax purposes. Even though there isn’t a federal penalty, having this confirmation can be beneficial if your state has its own health insurance requirements and penalties.
- Peace of Mind: Having the form gives you peace of mind that your healthcare coverage is properly documented with the IRS.
- State Requirements: Some states have their own requirements for health insurance coverage, and Form 1095-B could be necessary when filing your state taxes.
- Help Resolve Errors: If there’s an error in the IRS’s records, having this form could be crucial to resolving it.
What to Do When You Get Your Form 1095-B
Once you receive your 1095-B, don’t just toss it into a drawer. Here’s what you should do:
- Review It Carefully: Check that your personal information, your family members’ information, and the coverage period are all correct. If you spot any mistakes, reach out to the insurance provider or the entity that issued the form.
- Keep It Securely: File the form with your other tax documents, such as W-2s, and other income statements. You’ll need it for your tax records.
- Don’t Send It With Your Return: Unlike some tax forms, you don’t need to send Form 1095-B to the IRS when you file your federal tax return. However, you will need to keep it for your records.
Common Misconceptions and Things to Avoid
It’s common for people to misunderstand the purpose and use of Form 1095-B. Here are some common misconceptions and things to avoid:
- Thinking It’s Needed for Your Federal Return: Again, you usually do not need to submit the Form 1095-B with your federal tax return. Just make sure to keep it in your tax records.
- Ignoring It: Even though you might not need to file it, you shouldn’t ignore it. Keep it for your records in case you need to reference it later.
- Misplacing It: If you misplace the form, it can be difficult to get a replacement. Try to store it with your other important documents.
- Assuming It’s the Same as a Form 1095-A or 1095-C: The other 1095 forms are not the same. Be sure you know which form you need and what you should do with it.
What If You Don’t Receive a Form 1095-B?
If you think you should have received a Form 1095-B but didn’t, don’t panic. First, check with your health insurance provider or the government program from which you obtained your coverage. If you are still unable to obtain one, remember you may still have other documentation of your coverage, such as the physical health insurance card, an explanation of benefits (EOB) that shows the dates of coverage, or records of payments you made for your insurance.
In Conclusion: A Simple Form, an Important Purpose
Form 1095-B might seem like a small piece of the tax puzzle, but it plays an important role. It’s a document that verifies your health coverage and ensures that you are compliant with healthcare laws. By understanding its purpose, how it works, and how to use it, you can navigate your taxes with confidence. Keeping up with your health care and taxes may seem overwhelming, but remember that you can always get help from a professional.