In Parts I and II, I went through the documentation you will be receiving from your employer, lender, brokerage firm or government that shows your income and deductions throughout the year. Today, I will touch upon what you need to prove you were covered by health insurance throughout the year.
When you are filing your 2014 tax return, you will need proof of insurance for each month that you were insured during the year. Now, in a perfect world, every taxpayer covered by insurance would receive Form 1095. This form shows the type of coverage and the dates of coverage for each taxpayer. There are three types of 1095s: Form 1095-A from a government-sponsored exchange, Form 1095-B from an insurance provider or Form 1095-C from an employer.
Government-sponsored exchanges are required to file Form 1095-A for each taxpayer covered in 2014. However, there is no timetable as to when these forms will be sent out to taxpayers. If I had to guess, I would say they will be arriving mid-to-late February. If you are trying to get an early jump on your return, you may not receive Form 1095-A until after you file you return. This is not an issue, just make sure you denote on your return that you were covered throughout the year by Minimum Essential Coverage. If you purchased health insurance from an exchange, you may also be eligible for a Premium Tax Credit.
As part of the IRS’s phase-in of the Affordable Care Act, Form 1095-B and Form 1095-C are not required to be filed until 2015, so you may or may not receive this form this year. If you do no receive a 1095 from your insurance company or employer, there are other forms of documentation that will suffice to substantiate your coverage:
- Certificate of coverage
- Health insurance bills
- Social Security statement with deduction for Medicare payments
If you were not covered by health insurance during 2014, you will not receive any documentation regarding coverage. You will need to denote on your return that you did not maintain the minimum coverage and should prepare to pay the shared responsibility “penalty”, which is the greater of:
- $95 per uninsured adult & $47.50 per child (up to $285 per family)
- 1% of income above filing threshold
You will receive credit for the months you were covered throughout the year, but will owe a penalty for the months you were lacked coverage (the IRS allows a 2-month “gap” period between change of coverage with no penalty). If you were exempt from coverage for any amount of time during 2014, use Form 8965 to avoid paying a penalty.
Stay tuned for Part IV where I will discuss how your 2013 return can help you file in 2014.