Another new tax form required for entities that provide health coverage for individuals under Obamacare is Form 1095-B. This form is used to verify that an individual has ‘minimal essential coverage’ under the mandates of the Affordable Care Act (ACA). This coverage is referred to as the individual responsibility requirement under ACA, which requires either purchasing or receiving health coverage, or face paying a penalty. Although ACA is a health care directive, the penalty and coverage verification have been left to the IRS as the agency with the ability to both track and collect the penalty using tax returns.
The penalty aspect of ACA was controversial, but this is the way that Obamacare mandates that every individual have coverage. The penalty is minimal the first year, but increases steadily each year to equal the cost of mid-level health plan in the Marketplace. This form, submitted by the entity that provides the coverage, will demonstrate that a taxpayer had fulfilled the requirement and would avoid the penalty. Therefore, anyone who receives a copy of this form should retain it to verify that they have complied with the mandate.
The types of coverage that could be reported on the form include:
- Small Business Health Options Program
- Employer sponsored coverage
- Government-sponsored program
- Individual market insurance
- Multi-employer plans
The form is actually filed by the entity that provides the coverage, and then the Responsible Individual (Policy Holder) listed in Part I will receive a copy of the form for their records.
Part II is for Employer Sponsored Coverage, and Part III is for other Issuers or Coverage Partners.
Part IV has multiple spaces for Covered Individuals where there may be several family members under the same plan.
There are also boxes that indicate the number of months of coverage for the calendar year. There is an additional form that must be filled out for employers that provide coverage, the 1095-C, which I will discuss in another article.
Form 1094-B
Form 1094-B is simply the transmittal form that will accompany all 1095-B forms that are filed by one employer or provider of coverage. For instance, if an employer provides coverage they would send separate 1095-B forms for each employee, but only one 1094-B as the transmittal form. It is simple to fill out and poses no real challenges for the filer.
