This is the first year nearly all taxpayers will receive forms to report continuous minimal essential health coverage on their individual returns. The IRS created Forms 1095-A, 1095-B and 1095-C for insurance providers, employers and taxpayers to meet the Affordable Care Act (ACA) filing obligations. Generally, Form 1095-A is filed by the marketplace, while 1095-B is filed by other insurers and 1095-C by certain employers. The forms include the type and period of coverage, dependent coverage, etc.
It is important for tax preparers to verify that their clients are in compliance. This is easily accomplished if the client includes the appropriate Form 1095 with the preparation materials. However, the IRS has extended the due date until Mar. 31, 2016, for insurers and companies to issue Forms 1095-B and 1095-C to individuals. Recognizing a potential “pile up” problem, the IRS provided Fact Sheet FS-2016-10 with the following:
- Some taxpayers may not receive a Form 1095-B or 1095-C by the time they are ready to file their 2015 tax return. It’s not necessary to wait for these forms in order to file. Taxpayers may instead rely on other information about their health coverage and employer offer to prepare their returns.
- These new forms should not be attached to the income tax return.
The ACA box on the 1040 return can be checked to indicate that medical coverage was adequate based upon the client’s representation. However, it would be prudent to have the client sign a statement to that effect for the preparer’s files. A taxpayer’s failure to meet health care reform standards is subject to substantial penalties, unless they are eligible for certain hardship exceptions or short-coverage gap exemption.