Consultant’s Corner: Obamacare Tax Reporting Requirements

Q. I’m a bit confused about the Affordable Care Act and the 1095-C Form. Over the course of the last year I held three full-time jobs, but only had health insurance coverage for one. I did not receive a 1095-C form for my taxes, so what should I do?

Unless your second and third employers were or are “Applicable Large Employers” or ALEs—employers with 50 or more full-time employees (including full-time equivalent employees) in the preceding calendar year, and meeting certain other conditions—you will not receive Form 1095-C from those employers. If you don’t receive Forms 1095-C from all of your employers, you will need to report your health insurance coverage for the year on the “honor system.”

Since you did not have health insurance coverage for a portion of the year, you will owe a tax penalty (an Individual Shared Responsibility Payment) for failing to maintain required health insurance coverage for all of 2015 unless you qualify for one of the coverage exemptions. Basically, you will need to review the coverage exemptions to see if you qualify for an exemption and then complete and submit Federal Form 8965 with your return to claim the coverage exemption or calculate and report your Individual Shared Responsibility Payment.

While you may find it beneficial to engage a local accountant or CPA to help understand the Affordable Care Act’s Individual Shared Responsibility Provisions, calculate your Individual Shared Responsibility Payment, and otherwise prepare your returns, you can review IRS and related information on the Individual Shared Responsibility Provisions and the new information returns, like Form 1095-C, that employers must provide and taxpayers must deal with at IRS.gov, including the following discussions:

“9. Will I get a Form 1095-C from each of my employers?

Not necessarily. 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 (including full-time equivalent employees) in the year before the year to which the form relates. Most employers have fewer than 50 employees and therefore are not applicable large employers required to provide Form 1095-C to their full-time employees.

Even if your employer is an applicable large employer, you will only receive a Form 1095-C for that employer if you were a full-time employee for that employer for at least one month of the year or if you are enrolled in an applicable large employer’s self-insured health plan, even if you are a part-time employee…

12. What do I need to do with these forms?

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.

Like last year, if you and your family members had minimum essential coverage for every month of the year, you will check a box on your return to report that coverage. If you or any family members did not have coverage for the entire year, a coverage exemption may apply for the months without coverage. If you or any family members did not have coverage or an exemption, you may have to make an individual shared responsibility payment.

If you or anyone in your family receives a Form 1095-A from the Marketplace, you will use the information on the form to complete a Form 8962 to reconcile any advance payments of the premium tax credit or to claim the premium tax credit.

Do not file these forms with your tax return. Keep them in your records with your other important tax documents.

13. What should I do if:

• I have a question about the form I received,
• I think I should have gotten a form but did not get it,
• I need a replacement form, or
• I believe the form I received has an error?

In any of these situations, you should contact the provider of the form (or the entity that you think should have provided you a form, if you think you should have gotten a form but did not get it):

• For questions about the Form 1095-A, contact the Marketplace.
• For questions about the Form 1095-B, contact the coverage provider (see line 18 of the Form 1095-B for a contact telephone number).
• For questions about the Form 1095-C, contact your employer (see line 10 of Form 1095-C for a contact telephone number).”

The IRS website also says,

“The individual shared responsibility provision requires you and each member of your family to do at least one of the following:

• Have qualifying health coverage called minimum essential coverage
• Qualify for a health coverage exemption
• Make a shared responsibility payment with your federal income tax return for the months that you did not have coverage or an exemption.”

Healthcare.gov includes information about the tax for not having coverage during the previous year:

“If you can afford health insurance but choose not to buy it, you must pay a fee called the individual shared responsibility payment. (The fee is sometimes called the “penalty,” “fine,” or “individual mandate.”)

• You owe the fee for any month you, your spouse, or your tax dependents don’t have health insurance that qualifies as minimum essential coverage. See all insurance types that qualify.
• You pay the fee when you file your federal tax return for the year you don’t have coverage.
• In some cases, you may qualify for a health coverage exemption from the requirement to have insurance. If you qualify, you won’t have to pay the fee. Learn about health coverage exemptions…

The fee for not having coverage in 2015

The penalty for 2015 is the higher of these:

• 2% of household income
• Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace

OR

• $325 per adult
• $162.50 per child under 18
• Maximum: $975”

You can access Form 8965 and its instructions here.

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