Extension for Form 1095 Reporting What everyone needs to know

Many more taxpayers will see Form 1095’s this year. These forms are required to prove you have had health insurance coverage for the year. Due to the vast amount of work required to create this form, the IRS is granting a delay in getting versions of this form to taxpayers. Here is what you should know

For 2015 tax returns, everyone employed by a company with 50 or more employees will receive a new Form 1095. This form is in addition to the Form 1095’s received by other taxpayers using the Marketplace to purchase their health insurance. You need this form to file your taxes as it provides the necessary proof that you have adequate health insurance for the year.

A recent announcement by the IRS provides a delay for the issuing of this form due to complications in creating the proper form by employers and insurers.

What is happening

You need Form 1095 to file your income taxes for 2015. Without the form, you could be subject to the uninsured tax penalty called the shared responsibility payment. Unfortunately, many businesses do not have enough time to get the correct health insurance information and transfer the data into their other systems to generate the form. So the IRS has granted an extension for Form 1095 B and 1095 C. Here are the old and new dates.

Form Purpose Original due date New due date
1095 B & 1095 C Report to employees of adequate health insurance coverage by month 2/1/2016 3/31/2016
Summary forms 1094 B & 1094 C Summary forms sent to the government confirming employee health care coverage 2/29/2016
(3/31 if filing electronically)
(6/30 if filing electronically)

Note: This delay does not impact the timing of Form 1095 A, Health Insurance Marketplace Statement. 1095 A is the form you receive if you purchase your health insurance through the Marketplace and not through your employer. Nor does this impact those who have their health insurance through other programs like Medicare.

What it means to you

Since the IRS understands that taxpayers do not wish to wait to file their 2015 tax returns, the service is allowing for you to file your 2015 tax return without receiving this form. Here are some suggestions.

Check with your employer. If you work for an employer with more than 50 employees, check with your human resources to find out when you expect to receive the 1095 form. If there is no delay, then wait for Form 1095.

Look for other supporting documents. For 2015, the IRS will allow you to support your insurance coverage with means other than Form 1095. Simply collect this proof of insurance and save it in case of a future audit.

Wait. If you changed jobs or have a situation that suggests there may be a gap in insurance coverage you may wish to wait until you receive your documents. Please remember there is no corresponding delay granted to file your tax return. So if you still wish to wait, either file your tax return in April or file an extension. Taxes owed are still due on or before April 18th.

Considering the Affordable Care Act requires health insurance information to be transferred from insurance carriers into payroll reporting, it is understandably a complex reporting change. Since the shared responsibility tax payment is increasing substantially in 2015 and beyond, you will want to ensure you have adequate proof of qualified health insurance.



Do You Have a Sleeping Tax Penalty for 2014? – If you know someone who lacks health insurance…read this!

Beginning in January, 2014, you will be required to have health insurance or face a potential penalty. The initial penalty will be $95 per individual, $285 per family or 1% of your income whichever is greater. There is also a potential penalty assessed on employers who fail to offer employees health care insurance.

Beginning in January, 2014, virtually everyone will be required to have health insurance or face a potential penalty. The initial penalty will be $95 per individual, $285 per family or 1% of your income whichever is greater. There is also a potential penalty assessed on employers who fail to offer employees health care insurance.

What is not known is whether there will be some penalty grace period due to all the sign up problems with the government’s web site. If you are uninsured, your best defense is to review your health insurance options and register for an appropriate health insurance policy as soon as possible.

What you need to know

Detail 1 Every state is required to have an insurance exchange. This exchange is a web site where everyone can view health insurance options. If you need to shop for a policy, this is a good place to start.
Detail 2 No pre-existing condition limitation. Remember you are no longer to be refused insurance because of a pre-existing condition. Nor can you be charged an incremental premium based on health or gender.
Detail 3 Buy or pay the penalty? Hopefully, not many will be faced with this dilemma. Part of the health insurance legislation is the requirement for most small businesses to offer a qualified plan or face a penalty billed to their business.
Detail 4 Will I be penalized? There are exceptions to the penalty if you have to spend more than 8% of your household income on the cheapest health care insurance premiums. There are also subsidies if you cannot afford health care insurance. This is in the form of a health insurance premium tax credit if your household income is between 100 and 400 percent of the federal poverty level.

If you do not have health insurance start looking now. Remember this penalty may already be impacting you. With proper planning you should be able to avoid the unpleasant task of facing a tax penalty surprise at the end of 2014.

The New Premium Tax Credit – Claim it now or take it later?

Beginning on October 1, 2013 a new Health Insurance Marketplace is being opened by each state. This Marketplace will allow open enrollment for uninsured to obtain health insurance. If eligible you may also receive a reduction in your insurance premium by use of a Premium Tax Credit. Should you apply the credit now or wait and receive the credit on your tax return? Here is what you need to know.

Effective October 1st, there is a new tax credit available; The Premium Tax Credit. If you are eligible for this credit you can decide to take it now based on your estimated income for 2014 or take it later when you file your tax return for 2014. Who does this impact and what should you do?

What is the Credit and who is eligible?

Topline: If you have health insurance available from your employer, this credit is not for you. If, on the other hand, you are self-employed, your employer recently provided you a notice they are moving health insurance coverage to the “exchange or marketplace”, or you currently do not have health insurance then this information is important to understand.

Beginning in October, 2013 there is a new Health Insurance Marketplace established as part of Obamacare. Open enrollment in these health insurance plans runs from October 1, 2013 through March 31, 2014. If you are eligible and enroll in one of these plans through the Insurance Marketplace you may be eligible to have your premium reduced by the new Premium Tax Credit.

To be eligible for the Premium Tax Credit you must;

  • buy your health insurance through the new Health Insurance Marketplace (state exchanges)
  • be ineligible for health insurance coverage through an employer or through other government programs
  • not be claimed as a dependent on someone else’s tax return
  • if married, file a joint tax return
  • meet certain income requirements

Take it now or claim it later?

One of the tricky decisions you’ll make if enrolling for health insurance through the Marketplace is deciding to take the Premium Tax Credit to reduce your monthly health insurance premium payments or wait and receive the tax credit when you file your 2014 tax return. Here are some tips:

Predictable income? If your can accurately predict your 2014 income and number of dependents consider applying an estimated credit now to reduce your monthly health insurance cost.

Predictable family situation? If you know the number of dependents you will have in 2014 and your status (married, single, etc.) in addition to your income consider applying the credit during the year. If your family situation changes during the year you can always update your profile in the plan.

Understand the downside. If you misrepresent your income and it impacts your eligibility for the Premium Tax Credit you will have to repay the credit on your tax return. This could become a real financial hardship.

Middle ground? Consider estimating your income, but make it slightly higher than you anticipate. This way your monthly health insurance premium will be a bit higher, but you may also receive a larger refund at the end of the year.

Remember, beginning in 2014 if you do not have health insurance you may be subject to new penalties payable when you file your tax return.