Tax Advisory - December 2014
A Primer on the Impact to Your Tax Return from the Affordable Care Act (ACA)
Your 2014 tax return will be the first time you are required to report your health insurance coverage. This is for purposes of reconciling any premium subsidy you might have received from an Exchange, as well as potentially pay a penalty for not having had adequate coverage.
The first item you will likely encounter is a new Form 1095 which will be issued in January 2015. This form will be given to both you and the IRS to report your insurance coveage for all of 2014. There are actually three forms depending on where you obtained your coverage:
- Form 1095-A will be issued by the Exchange (i.e., Connect for Health Colorado).
- Form 1095-B will be issued by the insurer to report coverage under an employer-sponsored group plans, an individual private plan or a government plan (i.e., Medicare).
- Form 1095-C will be issued by employers who have more than 50 employees and are subject to the employer mandate to provide coverage.
For this first year, only the issuance of Form 1095-A
by the Exchange is required. The other two forms are optional and won’t be required for another year. We will need your Form 1095!
We will need this form to determine if you are subject to the penalty or whether you qualified for an exemption.
If you purchased your coverage through the Exchange (and received Form 1095-A), you are required to reconcile any premium subsidy you received. Depending on your family size and actual income for 2014 (compared to what you previously provided to the Exchange), you may be entitled to more subsidy, or possibly repay all or a portion of the subsidy.
Even if you do not receive a Form 1095-B or C, you are still required to disclose the adequacy of your coverage and if you were covered for the entire year on your 2014 tax return. At the time we prepare your return, we will provide you a checklist of the information needed. In the meantime, we are here to answer questions and be of assistance to navigate you through these new devlopments.