Orlando Harmon
The IRS does not require you to send information forms or other proof of health care coverage for yourself or your children when filing your tax return. However, you may receive a Form 1095-A, Health Insurance Marketplace Statement, at the beginning of the tax filing season, which provides information about your health care coverage. This form is important for filing your federal individual income tax return, and you should wait to file your income tax return until you receive it. If you have excess APTC for 2020, you are not required to report it on your 2020 tax return or file Form 8962, Premium Tax Credit (PTC). However, if you are claiming a net premium tax credit for 2020, you must file Form 8962. Additionally, if you live in a state that requires health coverage and you do not have it, you will be charged a fee when filing your 2024 state taxes.
| Characteristics | Values |
|---|---|
| Is medical insurance mandatory for kids? | It depends on the state. If you live in a state that requires you to have health coverage and you don’t have coverage (or an exemption), you’ll be charged a fee when you file your state taxes. |
| What forms are required to be filled out? | Form 1095-A, Health Insurance Marketplace Statement. |
| What is Form 1095-A? | It provides information about your health care coverage. |
| Who sends Form 1095-A? | The Health Insurance Marketplace sends this form to individuals who enrolled in coverage there, with information about the coverage, who was covered, and when. |
| What is Form 1095-B? | Health Coverage Form. |
| Who sends Form 1095-B? | Health insurance providers send this form to individuals they cover, with information about who was covered and when. |
| What is Form 1095-C? | This form is sent by certain employers with information about what coverage the employer offered. |
| What is Form 8962? | Premium Tax Credit (PTC) form. |
| When is the deadline for Form 1095-A? | January 31. |
| When is the deadline for Forms 1095-B and 1095-C? | January 31. |
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What You'll Learn
Premium Tax Credit (PTC)
The Premium Tax Credit (PTC) is a mechanism established by the Affordable Care Act (ACA) to make insurance more affordable for certain lower- and middle-income individuals and families. The PTC is a refundable tax credit and may be applied directly to the cost of insurance premiums. The PTC is available to those who purchase insurance through the ACA-established health exchanges and meet the law's household income eligibility requirements. Households earning between 100% and 400% of the federal poverty level (FPL) are eligible to receive the PTC.
The PTC is one of several ACA tax provisions and was first made available in 2014. The eligibility criteria for the PTC are determined by Section 1401 of the Affordable Care Act (also known as Obamacare). On May 23, 2012, the Internal Revenue Service (IRS) adopted a regulation stating that tax credits would be offered to eligible individuals who enrolled in a health plan through either a state or federally-facilitated exchange.
The PTC is not just available at tax time; eligible individuals can receive PTC benefits during the year. The marketplace will send advance payments of the PTC (known as APTC) to the individual's health insurance company, reducing their monthly out-of-pocket insurance costs. The amount of the APTC is based on the individual's estimated income for the calendar year and who is in their tax household.
At the end of the year, the IRS will compare the amount of APTC received with the individual's income reported on their federal tax return. If the individual received too much APTC, they may have to pay some of it back. If the individual did not take their full amount of APTC, they will receive the rest of their premium tax credits when they file their federal taxes.
To claim the PTC, individuals must file Form 8962, Premium Tax Credit (PTC) with their federal income tax return. They must also complete Form 8962 to reconcile advance payments of the PTC (APTC) with the premium tax credit allowed. If the individual's APTC is less than the premium tax credit, they will receive the difference as a higher refund or lower tax due. If the APTC is more than the premium tax credit, the individual must pay all or part of the excess APTC with their tax return.
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Health Insurance Marketplace Statement
The Health Insurance Marketplace Statement, or Form 1095-A, is a form that provides information about an individual's health care coverage. This form is typically sent by the Health Insurance Marketplace (or "Marketplace") to those who have enrolled in a qualified health plan through the Marketplace. It includes details such as the effective date of coverage, the amount of the premium, and any advance payments made towards the premium tax credit (APTC) on behalf of the individual and their tax family for the year of coverage.
While it is not mandatory to submit proof of health care coverage when filing your tax return, it is advisable to keep these records readily available. If you are expecting to receive a Form 1095-A, it is recommended to wait until you have received this form before filing your income tax return. This form will help you accurately report your health coverage information for yourself, your spouse, and any dependents.
The annual deadline for the Marketplace to issue Form 1095-A is January 31, and it should be available by mid-February at the latest. If you purchased coverage through the federally facilitated Marketplace and set up a HealthCare.gov account, you can access Form 1095-A online through your account. Alternatively, if you acquired coverage through a state-based Marketplace, you may be able to obtain an electronic copy from your state-based Marketplace account.
It is important to note that you may receive more than one Form 1095-A if there were changes in your family composition or if different members of your household were enrolled in different health plans. Additionally, Form 1095-A will only reflect the months during which you had a Marketplace plan. If you identify any inaccuracies or discrepancies in the form, you should contact the Marketplace Call Center for assistance.
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Individual shared responsibility payment
The individual shared responsibility provision requires each individual to have qualifying health care coverage (known as minimum essential coverage) for each month. This includes individuals of all ages, even children. The adult or married couple claiming a child or another individual as a dependent for federal income tax purposes is responsible for making the payment if the dependent does not have coverage or an exemption.
The individual shared responsibility payment was a penalty for violating the health insurance mandate. The Patient Protection and Affordable Care Act, signed in 2010, imposed a health insurance mandate to take effect in 2014. The federal health care law, also known as the Affordable Care Act, requires all Americans to have health insurance. For tax years before 2019, if you don't have health insurance, you must get an exemption from the requirement to buy coverage or pay a tax penalty. The law says citizens, employers, and the government share the responsibility of keeping everyone covered, so the penalty for going without insurance has been dubbed the "shared responsibility payment".
The amount of the shared responsibility payment depended on the number of uninsured people in your household, their ages, how long they were uninsured, and your household income. Under the Affordable Care Act, you and your dependents must be covered by a health insurance policy that provides "minimum essential coverage". Employer-sponsored coverage generally is minimum essential coverage. If an employee enrolls in employer-sponsored coverage for themselves and their family, the employee and all of the covered family members have minimum essential coverage. You are not required to make a shared responsibility payment if you claim an exemption from minimum essential coverage. If you have a gross income below the tax return filing threshold for a certain year, you are automatically exempt from the shared responsibility provision for that year. Most exemptions are claimed using Form 8965, Health Coverage Exemptions, when a tax return is filed.
The shared responsibility penalty was phased in over several years, with specific amounts set for each year from 2014 to 2018, and was eliminated starting in 2019. The federal tax penalty for violating the mandate was zeroed out by the Tax Cuts and Jobs Act of 2017, starting in 2019.
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Tax exemptions
The IRS does not require you to have medical insurance for your kids. However, if you do have health insurance for your children, you may be able to benefit from certain tax exemptions.
The IRS allows you to deduct medical and dental expenses for yourself, your spouse, and your dependents during the taxable year. These deductions apply only to expenses not compensated by insurance or otherwise. You can deduct these expenses on Schedule A (Form 1040) only if they exceed 7.5% of your adjusted gross income (AGI) for the year. This includes expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any function of the body.
If you are self-employed and have a net profit for the year, you may be eligible for the self-employed health insurance deduction. This is an adjustment to income for premiums you paid on a health insurance policy covering medical or qualified long-term care for yourself, your spouse, and your dependents. This policy can also cover your child under the age of 27, even if they are not your dependent.
If you have excess Advance Payments of the Premium Tax Credit (APTC) for 2020, you are not required to report it on your 2020 tax return or file Form 8962, Premium Tax Credit (PTC). However, if you are claiming a net premium tax credit for 2020, you must file Form 8962. For tax years other than 2020, if APTC was made for your or your dependent's health insurance coverage, you must complete and attach Form 8962 to your return.
If you receive a Form 1095-A, Health Insurance Marketplace Statement, indicating that advance payments of the premium tax credit were paid for coverage for you or your family member, you must file an individual income tax return and submit Form 8962, even if you are not otherwise required to file a tax return. You must also file an individual income tax return and submit Form 8962 to claim the premium tax credit, even if no advance payments were made for your coverage.
If you didn't claim a deductible medical or dental expense in an earlier year, you can file Form 1040-X to claim a refund for that year. This must generally be filed within 3 years from the date the original return was filed or within 2 years from when the tax was paid, whichever is later. However, do not include medical expenses that were paid by insurance companies or other sources.
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Health Insurance Marketplace
The Health Insurance Marketplace is a platform that offers a range of affordable health insurance plans to individuals and families. It is facilitated by the Affordable Care Act (ACA), which aims to increase access to health insurance for more people. The Marketplace is not restricted by income limits and provides special protection for insured individuals. Insurers cannot refuse coverage based on sex or pre-existing conditions, and there are no lifetime or annual limits on essential health benefits. Young adults can also remain on their family's insurance plan until the age of 26.
The Health Insurance Marketplace provides individuals with the opportunity to choose from various plans that cover medical, dental, and vision care. To get started, individuals can visit Healthcare.gov to find their state's Health Insurance Marketplace and follow the specific enrollment instructions for their state. Each Marketplace has an open enrollment period each year, and individuals may be able to change their coverage during a special enrollment period if they experience a significant life event, such as moving or having a baby.
When enrolling in the Health Insurance Marketplace, individuals must provide information about their projected income, address, and family composition. This information is used to estimate the amount of the Advance Payments of the Premium Tax Credit (APTC) that they may be eligible for. The APTC can be paid directly to the insurer to lower monthly premiums. It is important to note that individuals who choose this option must file a federal income tax return and complete Form 8962, Premium Tax Credit, to claim the credit and reconcile the payments.
Additionally, the Health Insurance Marketplace sends Form 1095-A, Health Insurance Marketplace Statement, to individuals enrolled in coverage. This form provides information about the coverage, including the total monthly health insurance premiums paid and any premium assistance received in the form of APTC. It is recommended to wait for Form 1095-A before filing your income tax return, as it helps complete the return accurately.
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Frequently asked questions
The IRS does not require you to send information forms or other proof of health care coverage for your children when filing your tax return. However, if you are expecting to receive a Form 1095-A, you should wait to file your income tax return until you receive that form.
Form 1095-A, Health Insurance Marketplace Statement, is a form that provides information about your health care coverage. It includes details such as the effective date, amount of the premium, and advance payments made on your behalf.
The Health Insurance Marketplace sends Form 1095-A to individuals who enrolled in coverage, including information about who was covered and when.
No, you should not attach Form 1095-A to your tax return. However, it is important to keep this form on hand as it provides valuable information about your health care coverage.
If you live in a state that requires health coverage and you don't have it, you may be charged a fee when filing your state taxes. Additionally, if you don't have qualifying health insurance coverage, you may need to make an individual shared responsibility payment when filing your federal income tax return.
