The Affordable Care Act (ACA) requires most individuals to obtain minimum essential health coverage or pay a penalty, with some exceptions. The penalty for not having coverage is to be paid when individuals file their federal tax return; for the 2015 tax year, the filing deadline is April 15, 2016. The recently postponed ACA reporting deadlines for employers may leave some wondering—What do employees need to do to prove they have minimum essential health coverage? Do employees need to wait for their 1095-B and 1095-C forms before they can file their tax returns?
Starting for calendar year 2015, employees are to receive a form from their insurer or employer indicating coverage (IRS Form 1095-B or 1095-C). Originally, the forms were required to arrive by the Form W-2 deadline (normally January 31, but February 1 for 2016). In late December, however, the IRS extended the reporting deadline for insurers and employers to March 31, 2016. (The delay is in place only for 2015 because it is the first year of reporting. For 2016 and beyond, the deadline will match the W-2 deadline.) While some insurers and employers may send employees the forms in advance of that extended deadline this year, others will take advantage of the extra time.
[Final Preparation for Filing the 1094/1095—Watch on demand for step-by-step guidance.]
Does this mean employees have to wait to file their tax returns?
No. The IRS has clarified that individuals do not have to delay filing their income tax returns because they have not yet received Form 1095-B or 1095-C. For the 2015 tax year, they can rely on the types of documentation listed below as proof of coverage. They can file their income tax returns before they receive Form 1095-B or 1095-C. (As an aside, none of the documents listed below must be sent to the IRS as attachments.) Also, individuals don’t have to file an amended return once they receive one of the forms from their insurer or employer. If individuals file their income tax return AFTER receiving Form 1095-B or 1095-C, for 2015 they don’t have to include the form with the return; it should be kept with their records.
How can individuals prove they have coverage when they file their tax return? The government suggests these forms of documentation as proof of insurance coverage:
- Insurance cards
- Explanation of benefits
- Statement(s) from insurers
- W-2 or payroll statement(s) reflecting health insurance deductions
- Record(s) of advance payments of the premium tax credit, and
- Other statements indicating an individual or family member had coverage.
Tax-filing procrastinators won’t catch a lucky break this time. The April 15 filing deadline lives on.
Julie Stich, CEBS
Director, Research at the International Foundation