Alyssa Lane
If you have medical insurance paid for by taxes, you may need to fill out a Form 1095 or Form 8962 when filing your tax return. Form 1095 has several variants, including Form 1095-A, Form 1095-B, and Form 1095-C, which are used to report health insurance coverage to the IRS. Form 1095-A is used as proof of Marketplace/exchange health insurance coverage and to reconcile premium subsidies. Form 1095-B is issued by health insurance companies for plans that are not Marketplace coverage, and Form 1095-C is sent by employers to offer coverage. Form 8962, on the other hand, is used to reconcile advance payments of the premium tax credit (APTC) and should be attached to your tax return.
| Characteristics | Values |
|---|---|
| Tax credit to lower monthly insurance payment | Premium tax credit |
| Tax form for Marketplace insurance | 1095-A |
| Tax form for other health coverage | 1095-B |
| Tax form for employer-provided health coverage | 1095-C |
| Tax form for Premium Tax Credit | 8962 |
| Health coverage for children | Children's Health Insurance Program (CHIP) |
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What You'll Learn
Premium tax credits
The premium tax credit is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace. It is a tax credit that can be used to lower your monthly insurance payment (your "premium"). The premium tax credit is also known as PTC.
To get this credit, you must meet certain requirements and file a tax return with Form 8962, Premium Tax Credit (PTC). The size of your Premium Tax Credit is based on a sliding scale. Those who have a lower income get a larger credit to help cover the cost of their insurance. When you enroll in Marketplace insurance, you can choose to have the Marketplace compute an estimated credit that is paid to your insurance company to lower what you pay for your monthly premiums (advance payments of the Premium Tax Credit, or APTC).
If you choose to have advance payments of the Premium Tax Credit made on your behalf, you will reconcile the amount paid in advance with the actual credit you compute when you file your tax return for the year. Either way, you will complete Form 8962, Premium Tax Credit (PTC) and attach it to your tax return for the year. Note: For tax year 2020 only, you are not required to attach Form 8962 with your 2020 tax return unless your PTC is more than the APTC paid on your behalf for 2020 (called net Premium Tax Credit or net PTC) and you are claiming net PTC.
If you do not opt for advance credit payments or the Marketplace determines that you were not eligible for advance payments at the time of enrollment, you should determine if you are eligible to claim the credit because your circumstances changed during the year. To claim the credit, you must file Form 8962 when you file your tax return for the year, which will either lower the amount of tax owed on that return or increase your refund.
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Form 1095-A
If you bought health insurance through a Health Care Exchange or Marketplace, you should receive Form 1095-A from your insurance company. This form is important for your tax filings as it helps you reconcile any advance payments of the premium tax credit. You can use the information on Form 1095-A to complete Form 8962, which you can file with your tax return to claim or adjust any premium tax credit.
The form includes information about the "second lowest cost Silver Plan" (SLCSP) and your "monthly enrollment premium". It is important to note that the monthly enrollment premium on Form 1095-A may differ from the actual monthly premium you paid, as it may only reflect the portion of the premium that applied to essential health benefits or the period of coverage if you started or ended the policy mid-month.
Overall, Form 1095-A is a crucial document for individuals who purchased health insurance through the Health Insurance Marketplace as it helps them complete their tax filings accurately and claim any applicable premium tax credits.
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Form 8962
The form has two parts. The first part calculates your annual and monthly contribution amount based on your family income and tax family size. Your tax family typically includes you, your spouse (if filing jointly), and any dependents. The second part of the form compares the amount of credit used to the final available credit. There are three possible outcomes: if you have received more credit than your final income allows, you may need to repay the difference; if you have received less credit than you qualify for, you can claim the remaining balance to reduce your taxes; and if you have received the correct amount, no further action is required.
It is important to complete and submit Form 8962 with your federal tax return, even if your income estimate was accurate. Failure to do so may result in ineligibility for Marketplace Advanced Premium Tax Credits (APTCs) in the future. Additionally, if your tax return is rejected due to a missing Form 8962, you may need to resubmit your tax return with the form or provide an explanation for its absence.
To summarise, Form 8962 helps taxpayers reconcile their premium tax credit usage and determine eligibility for any remaining credit or repayments. It is a crucial form for those who have received an APTC through the Marketplace to ensure accurate reporting of income and maintain eligibility for future benefits.
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Health Insurance Marketplace Statement
If you or anyone in your household enrolled in a qualified health plan through the Health Insurance Marketplace, you should receive Form 1095-A, the Health Insurance Marketplace Statement, by mail no later than mid-February. This form will be sent by the Marketplace, not the IRS, and may be available in your Marketplace account from mid-January. It includes information about the Marketplace plans that any member of your household had in 2024, including the start and end dates of coverage, the number of people in your household, and the second lowest-cost Silver plan (SLCSP).
You must have your Form 1095-A before you file your taxes. If you cannot find it in your mailbox or your Marketplace account, contact the Marketplace Call Center. If anything about your coverage or household is incorrect, you should also contact the Marketplace Call Center. If you receive a corrected or voided Form 1095-A, you may need to file an amended return using the information on the new form.
You will use the information from your Form 1095-A to fill out Form 8962, the Premium Tax Credit form. This will allow you to find out if you used the right amount of premium tax credit during the year. If you used too much, you will repay it via taxes. If you used too little, you can claim the difference as a credit.
If you did not have Marketplace coverage in 2024, you may need to file Form 8962 to report any excess amount of premium tax credit you used. If your tax return is rejected for not having Form 8962, you can contact the Marketplace Call Center to get a voided Form 1095-A to include with your tax return.
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Medicare, Medicaid, CHIP
Medicare is a federal program that provides health insurance to nearly 68 million people. While payroll taxes and general revenue cover most of the program's cost, enrollees pay about 15% of the cost of Medicare through premiums. These premiums are typically not paid with pre-tax dollars, but some beneficiaries can deduct their Medicare premiums when filing their taxes. For example, since 2012, the IRS has allowed self-employed individuals to deduct all Medicare premiums from their federal taxes. Additionally, Medicare Part A (Hospital Insurance) is considered qualifying health coverage under the Affordable Care Act, and enrollees can request an IRS Form 1095-B for tax filing purposes.
Medicaid and the Children's Health Insurance Program (CHIP) are health coverage programs that provide free or low-cost health insurance to millions of Americans, including low-income individuals and families, children, pregnant women, the elderly, and people with disabilities. Medicaid is a federal-state partnership, with each state designing and administering its own program within federal guidelines. As a result, eligibility and benefits vary by state. For example, some states have expanded their Medicaid programs to cover all individuals below certain income levels, while others have not. CHIP, on the other hand, is a health care program for children whose families earn too much to qualify for Medicaid but cannot afford private health insurance. CHIP fees are based on family income, and all states provide comprehensive coverage.
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Frequently asked questions
Form 1095-A is your proof of health insurance coverage during the year. It is also used to reconcile your premium subsidy on your tax return, using Form 8962.
Form 1095-A should be available online through your exchange/Marketplace account in January and no later than mid-February.
If anything about your coverage or household is wrong, contact the Marketplace Call Center. You may need to file an amended return using the information on your corrected 1095-A.
Form 8962, Premium Tax Credit, is used to reconcile your advance payments of the premium tax credit (APTC) with the premium tax credit you are allowed.
