Filing taxes can seem like a daunting task. Laws are always changing, so it can be hard to keep up with the requirements. When it comes to health insurance, you’ll need certain IRS forms to submit your returns correctly.
Whether you qualify for an exemption, a premium tax credit, or if you have to pay in, having all the necessary paperwork will make things a lot easier. Check out our tips below to get your healthcare documentation ready for the upcoming filing season.
The Law, Healthcare, and Tax Returns
Health insurance, legislation, and taxes are intrinsically linked. There are a few factors that ultimately affect your returns and the documentation you’ll need, such as:
- Whether you received healthcare coverage from an employer, union, or marketplace
- The type of plan you purchased
- If you used premium tax credits throughout the year
- The state in which you reside
Previously, the Affordable Care Act (ACA) required all American citizens, residents, and dependents to have minimum healthcare coverage or pay a penalty. However, this provision was repealed and no longer applies to tax returns from 2019 onward.
Furthermore, under the 2017 Tax Cuts and Jobs Act, the ‘individual shared responsibility payment’ was reduced to zero after 31 December 2018.
Which Forms Do I Need?
While you don’t need to submit IRS information forms, they are crucial to filing your tax returns. Here are the different kinds and why they’re required.
Form 1095-A: Health Insurance Marketplace Statement
If you’ve purchased healthcare cover for yourself or your family through a marketplace, you’ll receive a 1095-A form. It contains pertinent details, including the effective date, premium amounts, and any advance payments or subsidies.
To claim a premium tax credit, you’ll have to complete Form 8962, which you can’t do without the 1095-A form. It’s, therefore, best to wait for this document before filing your returns.
Form 1095-B: Health Coverage
Your healthcare insurer usually sends this form to you to verify that you had coverage for the given period. You’ll use it to satisfy any requirements under the ‘individual shared responsibility’ provision. It also contains other vital information that’ll assist in filing your tax returns.
Form 1095-C: Employer-Provided Health Insurance
If you received health insurance from your employer or union instead of a private company or marketplace, then you’ll get a 1095-C form. It also contains essential coverage details and will help you determine whether you’re eligible for any credits.
Premium Tax Credits
You may be eligible for a premium tax credit if you’ve purchased cover through the Health Insurance Marketplace and meet the following criteria:
- Your household income ranges between 100% and 400% of the federal poverty line
- You don’t file your returns under ‘Married Filing Separately’
- You can’t get affordable coverage through an acceptable employer-sponsored plan
- You’re not eligible for government-sponsored health insurance
It’s best to find out the full details and requirements for a PTC, but keep in mind that you’ll need to complete the 8962 form.
Other Supporting Documentation
It’s always an excellent idea to keep pristine records for your tax returns. If the IRS requires any additional information or verification, the following documentation will come in handy:
- Your insurance cards
- Details of benefits
- Healthcare insurance statements
- Payroll or W-2 statements reflecting deductions for coverage
- Records of all advance payments
- Any other documentation that verifies your health care coverage
State-Level Penalties to Keep in Mind
The following states have individual healthcare mandates, which could still mean penalties for persons without the minimum essential coverage.
- District of Columbia
- New Jersey
- Rhode Island
If you live in one of the above states, it’s worthwhile finding out what kind of penalties, health insurance, and tax requirements apply.
Ready for Tax Season
Getting your health insurance documentation ready for tax season doesn’t need to be a painful process. Using the correct forms, you’ll be able to claim premium tax credits (if you’re eligible) and submit your returns without a hassle.
Supporting documents are helpful, too, in case the IRS needs further verification. Keep state-level penalties and requirements in mind, and you’ll be better prepared to file your taxes.