IRS Form 1095-B is used to verify that an individual has ‘minimal essential coverage’ under the mandates of the Affordable Care Act (ACA). Once you receive the form, you may wonder if you have to do anything with it under the new rules, and how it affects your income tax return.
1095-B: Verification of “Minimum Essential Coverage’
Form 1095-B is prepared and filed by any entity that provides health coverage, so it is possible for you to receive the form from a small employer, government entity or individual insurance company that is not a part of the ACA Healthcare Marketplace. (Marketplace health plans are reported separately on Form 1095A, and those plans automatically meet the ACA minimums.)
The reason that you receive the Form 1095-B is to verify that your healthcare plan meets the minimum coverage requirements established by the ACA. If the coverage is inadequate and does not meet ACA criteria, then you will have to pay a penalty, also known as the Shared Responsibility Payment under Obamacare.
Because of this, Form 1095-B is important to retain for your records in the event there is any question about the scope of your health plan’s coverage. You will notice that you are listed as the Responsible Individual (Policy Holder) on the form, even if you did not directly purchase the coverage (such as with employer plans.) Also, your dependents are listed on the form as part of your coverage.
What If My Health Plan Does Not Provide the Minimum Coverage?
Just because you receive Form 1095-B does not mean that you meet the ACA minimums. Form 1095-B simply reports the coverage, and even breaks it down by the month to verify that you had coverage for the whole tax year. Any breaks in coverage of less than three months are not penalized. If you bought insurance yourself, you can simply ask your insurer if the plan is ‘ACA compliant’, and any plan purchased prior to Obamacare will qualify. Medicare and Medicaid also automatically comply with ACA minimums.
The penalty for an individual for tax year 2015 is $325 or 2% of income, and so there is good reason to check if your plan meets ACA minimums. There are also exemptions available such as hardship or disability, which may relieve you of paying the penalty.
