It’s tax season, and that’s not a time that most of us look forward to with unbridled joys every year. However, everyone wants to file their taxes correctly and easily.
As you prepare your tax documents, remember that your health insurance will pay a role in your tax filing.
The Law Requires Health Insurance
The Affordable Care Act makes changes to health insurance that affect Americans' tax filings.
Prominently, the Affordable Care Act requires most Americans to carry health insurance coverage. Americans have to carry health insurance through their employer, buy a private plan from the federal health care marketplace, or buy it through a private insurance carrier. If you don’t carry health insurance, you can face a tax penalty for failing to have coverage.
Furthermore, if you carry certain health plans, you may qualify for tax credits. Many plans offered on the federal exchange come with tax subsidies. This makes it important to know how you get your insurance.
Having health insurance is the law, and failure to carry it could cost you. As you prepare to file your taxes, make sure you have proper insurance verification on hand.
Health Insurance Verification
During January or early February, taxpayers should have received a form from in the mail their employer or insurance provider. This is a 1095 form. The 1095 form has three classifications. These are the 1095-A, 1095-B, and 1095-C forms. Policyholders will only receive one of the 1095 forms.
- Form 1095-A: Verifies that you purchased health insurance through the federal marketplace.
- Form 1095-B: Sent by your insurance provider to prove that you carried a private plan.
- Form 1095-C: Provided by your employer. This form shows that the employer offered you health insurance coverage.
If you have a 1095-A form, you will need to use this form to complete your tax returns. The 1095-A form verifies that you bought health insurance through the federal marketplace. Because you did so, you might qualify for tax breaks and will need the form to prove your eligibility.
When filing your federal taxes, you have to state whether you had health insurance coverage in the previous year. Your verification steps are different based on your filing method. In some cases, you may only have to check a box that says you carried coverage. By verifying that you have insurance, you protect yourself from financial penalties.
However, you do not have to provide copies of any of the 1095 forms when you file your tax returns. Some people may not even receive a 1095 form at all. Other information can often substitute for verification.
If you need your 1095-A form, wait for it to arrive before filing. If you don't need a 1095-A form, you can often go ahead and file your taxes even if you haven’t gotten a 1095-B or 1095-C form. But, keep all these 1095 forms on file. They will help verify that you have insurance if questions about your taxes ever arise.
Do you have questions about health insurance coverage under the Affordable Care Act? Simpson Financial Group is here to help you get the correct health insurance to cover you and your dependents. Go online for your free quote today. You can call us at (877) 727-7780 for more information.