Affordable Care Act - What to Expect when Filing Your Tax Return
Health Care Information Forms
Taxpayers who are preparing to file their tax returns may receive multiple health care information forms that they can use to complete their return. The forms are:
- Form 1095-A, Health Insurance Marketplace Statement
- Form 1095-B, Health Coverage
- Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.
Depending upon your specific circumstances, the Health Insurance Marketplace, health coverage providers and certain employers may provide information forms to you to help you accurately report health coverage information for you, your spouse and any dependents when you file your individual income tax return. Health coverage providers, employers and the Marketplace will also file these forms with the IRS.
If you are expecting to receive a Form 1095-A, you should wait to file your income tax return until you receive that form. Some taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their tax return and it is not necessary to wait for Forms 1095-B or 1095-C in order to file. While the information on these forms may assist in preparing a return, they are not required. Individual taxpayers should file their returns as they normally would.
The deadline for the Marketplace to provide Form 1095-A is January 31 of the year following the coverage year. The deadline for insurers, other coverage providers and certain employers to provide Forms 1095-B and 1095-C to individuals has been extended to March 2, 2017 for the 2016 tax year.
The IRS has posted a set of questions and answers about the Forms 1095-B and 1095-C. The questions and answers explain who should expect to receive the forms, how they can be used, and how to file with or without the forms.
Individual Shared Responsibility Provision
The Affordable Care Act calls for all taxpayers to do at least one of three things:
- Have qualifying health insurance coverage for each month of the year
- Have an exemption from the requirement to have coverage
- Make an individual shared responsibility payment when filing federal income tax return.
Most taxpayers are in the first category and they will simply check a box on their return to indicate that everyone listed on the front of the return has qualifying health care coverage for the entire year. Some taxpayers will have to file a form, Form 8965, to claim an exemption from the requirement to have health care coverage.
Taxpayers who do not have qualifying health care coverage and who do not qualify for an exemption will need to make an individual shared responsibility payment when they file their tax returns. Some taxpayers will find that they qualify for an exemption for part of the year but must make a payment for another part of the year. These taxpayers should pay close attention to guidance that covers their situation.
Almost all taxpayers must report health care coverage, claim a coverage exemption or report a shared responsibility payment. Returns that do not reflect at least one of these options will be rejected if filed electronically. If filed on paper, returns that do not reflect at least one of these options will take longer to process and any refunds will be delayed. Taxpayers should respond promptly to IRS correspondence about their health care coverage
Find out if you must make a payment by using our interactive tool, Determine if you are Responsible for the Individual Shared Responsibility Payment.
Taxpayers who did not maintain coverage throughout the year and meet certain criteria may be eligible to obtain an exemption from coverage. How an individual obtains an exemption depends upon the type of exemption. Some exemptions can be obtained only from the Marketplace other exemptions are claimed only when you file your tax return, and yet others can be obtained from the Marketplace, or claimed when you file your tax return.
The Federally-facilitated Marketplace is no longer granting the exemptions for members of a health care sharing ministry, members of Indian Tribes, and incarceration. Eligible individuals can still claim these exemptions on a tax return.
Claim or report coverage exemptions on Form 8965, Health Coverage Exemptions, and file it with Form 1040, Form 1040A, and Form 1040EZ. Each of these forms can be filed electronically.
Individuals who are granted a coverage exemption from the Marketplace will receive a notice with a unique Exemption Certificate Number or ECN. Keep this notice with other important tax information and enter the ECN on Form 8965 in Part I, Marketplace-Granted Coverage Exemptions for Individuals. Individuals who applied for an exemption with the Marketplace but do not have an ECN may enter “PENDING” in Part I of Form 8965. An ECN is not required for exemptions claimed on your tax return.
To claim an exemption when you file your tax return, simply file Form 8965 with your Form 1040, Form 1040A, or Form 1040EZ. It is not necessary to call the IRS or to obtain the exemption in advance.
Individuals that need to make a shared responsibility payment can calculate the payment using a work sheet included in the instructions for Form 8965. Taxpayers that do not have coverage and have an income below the filing requirement threshold for their filing status are exempt and should not make a payment. It is not necessary to file a return solely to claim this exemption.
See the Calculating and Reporting the Payment page for more information.
Premium Tax Credit
Individuals who purchased coverage through the Health Insurance Marketplace may be allowed to take the premium tax credit. During the open enrollment application process for health coverage through the Marketplace, most individuals requested financial assistance. The Marketplace, using information individuals provided about their projected income, address, and family composition for the year, estimated the amount of the premium tax credit that they would be allowed on their tax return. Individuals then had an option to have advance payments of the premium tax credit paid directly to their insurer to lower their monthly premiums.
Individuals who chose to have advance credit payments sent to their insurer must file a federal income tax return, even if otherwise not required to file. Complete Form 8962, Premium Tax Credit (PTC) to claim the premium tax credit and reconcile the advance credit payments with the premium tax credit allowed. If the amount is less than the actual premium tax credit, the taxpayer will get the difference as a higher refund or lower tax due. If the advance credit payments that were paid to their health care providers were more than the actual credit, they may need to pay the difference with their tax returns. The completed Form 8962 must be filed with the federal income tax return.
Those who enrolled in coverage through the Marketplace but didn’t get the benefit of advance credit payments may claim the premium tax credit when they file their return. Individuals can complete Form 8962 to find out if they are allowed the premium tax credit. For more information about the premium tax credit, see our Premium Tax Credit page or use the interactive tool, Am I eligible to claim the Premium Tax Credit?.
Individuals who purchased coverage through the Health Insurance Marketplace should receive Form 1095-A, Health Insurance Marketplace Statement . This form provides information you will need when completing Form 8962. Taxpayers with questions about the information on Form 1095-A, or about receiving Form 1095-A, should contact your Marketplace directly.
Some taxpayers may receive a corrected or voided Form 1095-A because the information on the initial form was incorrect or incomplete. For more information on what you need to do with a corrected or voided Form 1095-A, see Corrected, Incorrect or Voided Forms 1095-A for Tax Years 2014, 2015 and 2016.This information can help you assess whether you should file an amended tax return.
Free File and e-file help Simplify Tax Time
All taxpayers who are reporting coverage, claiming a health coverage exemption, making an individual shared responsibility payment, or claiming the premium tax credit should consider filing their tax return electronically. Failure to check the "Full-year coverage” box when no Form 8965 is attached and no shared responsibility payment is reported will generate an e-file rejection starting in filing season 2017. E-filing a tax return is the simplest way to file a complete and accurate tax return as it guides individuals through the process and does all the math for them.