Form 1095 is a collection of Internal Revenue Service (IRS) tax forms in the United States which are used to determine whether an individual is required to pay the individual shared responsibility provision. Individuals can also use the health insurance information contained in the form/forms to help them fill out their tax returns.
The individual forms are:
Form 1095-A "A Health Insurance Marketplace Statement"
Form 1095-B "Health Coverage"
Form 1095-C "Employer-Provided Health Insurance Offer and Coverage".
Individuals may receive one or multiple versions of Form 1095. The Affordable Care Act includes both the individual mandate and the employer mandate.
The employer mandate requires employers with 50 or more full-time equivalent employees to offer healthcare coverage to their full-time employees or potentially face a fine. Form 1095 determines whether the employee or the employer have to pay a fine for failing to meet the individual mandate and the employer mandate, respectively.
Form 1095 is filed by whomever provided health insurance coverage to an individual, which means individuals don't have to fill out Form 1095 themselves.Form 1095 contains individual health insurance information. Individuals can use the information on Form 1095 to fill the "Health care: individual responsibility" line on Forms 1040, 1040A or 1040EZ. For example, if an individual fails to meet adequate medical coverage, and does not qualify for any exemptions, they will enter the shared responsibility payment amount on that line in the 1040 Forms. Form 1095 is also used to fill out Form 8962 (premium tax credit) and Form 8965 (health coverage exemptions).
Although the individual mandate penalty disappeared after January 1, 2019 as a result of the Tax Cuts and Jobs Act, the penalty was still in effect for all of 2018. This means individuals needed to obtain health coverage, qualify for a health coverage exemption, or pay a penalty to the IRS in 2019 for months they went without either coverage or an exemption in 2018.
At RCB & Associates, LLC, we are finding more questions about Forms 1095 coming from our CPA colleagues than our clients and we are happy to address them. With clients on extensions, there will be lingering issues for our MI tax professionals and our team is happy to assist at 616-233-9050.