Haris Ashley
The IRS does not require individuals to send information forms or proof of health care coverage when filing tax returns. However, it is recommended to keep these records on hand. The IRS does require individuals to report changes in circumstances, such as changes in household income or family size, which may affect advance payments of the premium tax credit. There are various forms that may be required for health insurance and medical expenses, such as Form 1095-A, Form 1095-B, Form 1095-C, and Form 8962. These forms provide information about health care coverage, premiums paid, and eligibility for tax credits. It is important to note that individuals may be able to deduct certain medical and dental expenses on their tax returns if they meet certain criteria.
| Characteristics | Values |
|---|---|
| Medical insurance requirements | If you have excess APTC, you are not required to report it on your tax return or file Form 8962, Premium Tax Credit (PTC). However, if you are claiming a net premium tax credit, you must file Form 8962. |
| Health coverage documentation | You are not required to send the IRS information forms or proof of health care coverage when filing your tax return. However, it is recommended to keep these records. |
| Form 1095-A | If you purchased health care insurance through the Marketplace, you should receive Form 1095-A, Health Insurance Marketplace Statement, at the beginning of the tax filing season. This form provides information on coverage details, such as effective dates, premium amounts, and APTC paid. |
| Form 1095-B | Form 1095-B may be sent by health insurance providers to individuals they cover, detailing who was covered and when. |
| Form 1095-C | Form 1095-C is provided by certain employers to offer information on health coverage options. It can be used to determine eligibility for the premium tax credit and if family members enrolled in specific coverage types. |
| Medical and dental expenses | You may be able to deduct medical and dental expenses for yourself, your spouse, and your dependents if they exceed 7.5% of your adjusted gross income for the year. This includes inpatient hospital care, acupuncture treatments, inpatient treatment for addiction, smoking-cessation programs, prescription drugs, weight-loss programs, and more. |
| Self-employed health insurance deduction | Self-employed individuals with a net profit for the year may be eligible for a self-employed health insurance deduction, which is an adjustment to income. |
| Transportation expenses | Transportation expenses for medical reasons, such as travel to receive medical care or visit a mentally ill dependent, can be included in medical expenses. This includes out-of-pocket costs like gas, oil, parking fees, and tolls. |
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What You'll Learn
Premium tax credit
The premium tax credit (PTC) is a refundable tax credit that helps eligible individuals and families with low or moderate incomes afford health insurance purchased through the Health Insurance Marketplace, also known as the Exchange. The size of the premium tax credit is based on a sliding scale, meaning those with lower incomes get a larger credit to help cover the cost of their insurance.
When you or a family member applies for Marketplace coverage, the Marketplace will estimate the amount of the premium tax credit that you may be able to claim for the tax year. This estimate is calculated using information about your family composition, projected household income, and other factors, such as whether those being enrolled are eligible for other, non-Marketplace coverage. Based on this estimate, you can decide whether to receive your credit in advance directly to your insurance company to lower your monthly premiums, or to get the benefit of the credit when you file your tax return for the year.
If you choose to have advance payments of the premium tax credit made on your behalf, you will need to reconcile the amount paid in advance with the actual credit computed when you file your tax return for the year. This is done by completing Form 8962, Premium Tax Credit (PTC) and attaching it to your tax return for the year. For tax years other than 2020, if you get the benefit of advance credit payments in any amount, or if you plan to claim the premium tax credit, you must file a federal income tax return and attach Form 8962 to your return.
To qualify for the premium tax credit, your health insurance situation, tax situation, and income need to meet certain criteria. You or someone in your tax family must have enrolled in a health insurance plan through the marketplace for at least one month of the calendar year in question. You might not qualify for the PTC if other health insurance options are available to you, such as employer-sponsored insurance or another government program such as Medicare.
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Health Insurance Marketplace Statements
It is important to note that you should not attach Form 1095-A to your tax return. Instead, you should wait to file your income tax return until you receive this form, as it is necessary for completing your tax filing accurately. Form 1095-A is particularly important for those who purchased coverage through the federally facilitated Marketplace or a state-based Marketplace, as it verifies your Marketplace coverage.
In addition to Form 1095-A, there are other health coverage information forms you may receive, such as Form 1095-B and Form 1095-C. Form 1095-B may be sent by health insurance providers to individuals they cover, detailing who was covered and when. Form 1095-C is provided by certain employers, specifically those with 50 or more full-time employees, to offer information on the coverage they provided. These forms can assist in determining eligibility for the premium tax credit and can be useful in preparing tax returns, but they are not required to file a tax return.
If you had a Marketplace plan and did not receive Form 1095-A, or if you believe the information on the form is incorrect, you should contact the Marketplace from which you received coverage. You may need to amend your tax return if you receive a corrected or voided Form 1095-A.
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Medical and dental expenses
The deductible expenses must exceed 7.5% of your adjusted gross income for the year to be eligible. Medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any function of the body. This includes inpatient hospital care, residential nursing home care, acupuncture treatments, inpatient treatment for drug addiction, smoking-cessation programs, prescription drugs for nicotine withdrawal, weight-loss programs for specific diseases, and psychiatric care.
Transportation expenses for medical reasons can also be included, such as out-of-pocket costs like gas and oil, parking fees, and tolls. However, depreciation, insurance, general repair, or maintenance expenses are not deductible. You can either use your actual expenses or the standard medical mileage rate, which was 21 cents per mile in 2024.
Additionally, you can include the cost of meals and lodging provided by a hospital or similar institution if the primary reason for being there is to receive medical care. In certain cases, you may also include the cost of lodging outside of a hospital setting if it meets specific requirements, such as being primarily for and essential to medical care.
Other deductible expenses include funeral or burial expenses, nonprescription medicines, nicotine replacement products, health insurance costs for self-employed individuals with a net profit, and amounts paid for cosmetic surgery or a trip for the general improvement of health. It's important to note that health club dues or amounts paid for general health improvement without a specific medical condition are not deductible.
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Health coverage documentation
The IRS does not require you to send any information forms or proof of health care coverage when filing your tax return. However, you should keep these records on hand.
If you purchased health care insurance through the Marketplace, you should receive a Form 1095-A, Health Insurance Marketplace Statement, at the beginning of the tax filing season. This form will show coverage details such as the effective date, the amount of the premium, and the advance payments of the premium tax credit (APTC) paid on your behalf for the year of coverage. The deadline for the Marketplace to provide Form 1095-A is January 31. If you are expecting to receive a Form 1095-A, you should wait to file your income tax return until you receive it.
If you are enrolled in Medicaid, you will receive a Form 1095-B. Certain employers will send Form 1095-C to certain employees, with information about what coverage the employer offered. You will only receive a Form 1095-C from your employer if that employer is an applicable large employer, meaning it had 50 or more full-time employees in the year before the year to which the form relates. You should not attach any of these forms to your tax return.
If you are claiming a net premium tax credit (the amount by which your premium tax credit is more than your APTC) for 2020, you must file Form 8962, Premium Tax Credit (PTC), and attach it to your return. If you chose to have advance payments of the premium tax credit paid directly to your insurance company, you must complete Form 8962 and file a federal income tax return, even if you are otherwise not required to file. You must also file an individual income tax return and submit a Form 8962 to claim the premium tax credit, even if no advance payments of the premium tax credit were made for your coverage.
If you itemize your deductions for a taxable year on Schedule A (Form 1040), Itemized Deductions, you may be able to deduct the medical and dental expenses you paid for yourself, your spouse, and your dependents during the taxable year to the extent these expenses exceed 7.5% of your adjusted gross income for the year. This deduction applies only to expenses not compensated by insurance or otherwise, regardless of whether you receive the reimbursement directly or payment is made on your behalf to the doctor, hospital, or other medical providers. Medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body. You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. You can also include out-of-pocket expenses, such as the cost of gas and oil, when you use a car for medical reasons.
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Tax forms and credits
The IRS does not require you to submit information forms or other proof of healthcare coverage when filing your tax return. However, it is a good idea to keep these records on hand.
If you are claiming a net premium tax credit for 2020, you must file Form 8962, Premium Tax Credit (PTC). For tax years other than 2020, if advance payments of the premium tax credit were made for your or a member of your tax family's health insurance coverage through the Health Insurance Marketplace, you must complete Form 8962, Premium Tax Credit (PTC), and attach it to your return. Your tax family consists of every individual you claim on your tax return – yourself, your spouse if filing jointly, and your dependents. You will receive Form 1095-A, Health Insurance Marketplace Statement, which provides you with information about your healthcare coverage. You should wait to file your income tax return until you receive that form. Use the information from Form 1095-A to complete Form 8962 to reconcile your APTC with the premium tax credit you are allowed or – if you are eligible – to claim the premium tax credit.
If you receive a Form 1095-A, Health Insurance Marketplace Statement, showing 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 a Form 8962 to reconcile those advance payments, even if you would not otherwise be required to file a tax return. You also must file an individual income tax return and submit a Form 8962 to claim the premium tax credit, even if no advance payments of the premium tax credit were made for your coverage.
Form 1095-C is sent to individuals who work full-time for applicable large employers. Part-time employees will also get this form if they enroll in self-insured coverage provided by an applicable large employer. Form 1095-C shows coverage that your employer offered to you even if you chose not to take that coverage. You will use the information on these forms to verify that you, your spouse, and any dependents had coverage for each month during the year.
If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. If you use a credit card, include medical expenses charged to your credit card in the year the charge is made, not when you actually pay the charged amount. If you didn't claim a medical or dental expense that would have been deductible in an earlier year, you can file Form 1040-X, Amended U.S. Individual Income Tax Return, to claim a refund for the year in which you overlooked the expense. Don't claim the expense on this year's return. Generally, a claim for a refund must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. You can include in medical expenses insurance premiums you pay for policies that cover medical care. You can't include in medical expenses insurance premiums that were paid and for which you are claiming a credit or deduction.
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Frequently asked questions
The IRS does not require you to have a specific medical insurance plan. However, if you have insurance, you may be able to deduct certain medical and dental expenses that you paid for yourself, your spouse, and your dependents during the taxable year.
To claim deductions for medical and dental expenses, these expenses must exceed 7.5% of your adjusted gross income for the year and must not be compensated by insurance or other means.
You may need to file Schedule A (Form 1040), Itemized Deductions, to itemize your deductions for the taxable year. You can figure out the amount you're allowed to deduct on Schedule A. For additional information, refer to Publication 502, Medical and Dental Expenses.
