Health insurance paperwork and related reporting responsibilities are overwhelming for the human resource department of organizations with significant employee counts.
Under the Affordable Care Act (ACA), the Internal Revenue Service (IRS) requires all qualified health plan providers and applicable employers to provide a report with detailed information about health coverage and health plan enrolment using tax forms 1095 a 1095 b 1095 c.
Both employers and employees have to understand the significance of 1095-a, 1095-b, 1095-c.
Along with the importance of each form type, they must also know the differences between 1095-a vs 1095-b vs 1095-c.
In this blog, we will explore each of these forms in detail and understand their needs, and difference between 1095 a and b, and the difference between 1095 b and c.
What Are 1095 Forms?
Before discussing the different types of forms, let us understand what is a 1095 form.
What is 1095 form?
This form contains complete documentation of your individual health insurance information.
Your insurance provider will send you this form annually, as per your health insurance policy, which means you do not have to fill out the forms on your own.
You might receive either a Form A, B, or C, or a combination of these as per your health insurance.
With these IRS tax forms, you can fill out your tax returns. These forms determine if employees and employers have fulfilled their mandate under the ACA.
These forms provide information to the IRS if an employee, his/her spouse, and any dependent member had healthcare insurance coverage for the whole tax year.
There is also information for the months for which there was no coverage.
Another important question is when do 1095 form come out. The form is postmarked annually by 28th February. If you do not receive the form by 15th March, get in touch with your insurance provider and request a duplicate copy of your form.
You must have this form to file your income tax return if you have health coverage throughout the year.
In the next segments, we will discuss the different types of forms.
What is Form 1095-A?
1095 A form is also referred to as the Health Insurance Marketplace Statement.
Now let us discuss what is a 1095-a health insurance marketplace statement.
As per ACA mandates, every state must have a health insurance exchange, which is also known as a Marketplace.
Small businesses, employees, and families can purchase private insurance plans online from the Marketplace. These are run by the state or the federal government.
If employees purchase healthcare coverage from a Marketplace within a tax year, they are entitled to receive form 1095 a health insurance marketplace statement from the provider.
The 1095-a deadline is mid-February every tax year. Qualified recipients must receive this form via mail from Health Insurance Marketplaces.
This insurance plan covers employees who do not have access to or did not participate in any health insurance plan sponsored by the employer organization the previous year.
What information is provided in the 1095 A form?
Since Form A provides a report on the type of coverage an employee receives, it contains the following information:
- Insurance coverage amount
- Names of people covered under the plan
- Total value of the premium paid
- Premium tax credits for paying the health plan
What is Form 1095 A used for?
With a 1095 A form, an employee can do the following things:
- File an income tax return accurately with the IRS
- Fill out Form 8962 to request a refundable premium tax credit
- Reconcile credit on returns with advance payments on premium tax credit
What is Form 1095 B?
1095 B form (Health Coverage) provides information regarding healthcare coverage to the IRS about individuals specifically covering their families, too.
The report contains details like the type of plan, coverage period, and names of dependents included in the plan.
The tax form also reports to individuals who are covered under the minimum essential coverage, which is mandatory by the Affordable Care Act.
Individuals must have the 1095 B form as authentication to establish that they and their respective dependents have had minimum essential coverage in the last year.
Issuing authorities of Form 1095 B
Issued by health coverage providers, the 1095 B form is mailed to individuals.
The health coverage providers can be any one of the following:
- Government agencies like CHIP or Medicare
- Insurance companies, apart from Marketplace
- ‘Self-insured coverage’ - employers or small businesses often provide certain kinds of health coverage options.
Who files Form Type B?
Mainly, employers will file the 1095 B form. The employer should run a small business of less than 50 full-time employees and not be subject to employer-shared responsibility provisions under the ACA.
The form should be filled out for all the employees who have undertaken the self-insured group health plan.
What information is provided in the 1095 B form?
Form type B contains all relevant information about minimum essential coverage that employees got in the last year. It is inclusive of:
- Kind of plan
- Coverage period
- Name of the covered employee, along with names of dependent people covered in the plan
- Name of the business
- Name of the insurance company providing the plan
What is Form 1095 C?
Type C form (employer-provided health insurance offer and coverage) is a tax form generally used by applicable large employers (ALEs). The form reports health insurance coverage information for all its employees to the IRS.
As per the ACA employer mandate, qualified ALE employers have to provide healthcare coverage to their employees.
This coverage is reported to the IRS via form C. This form is also sent to all full-time employees of an organization who work for 30 hours or more weekly.
This remains valid even if they had the employer-sponsored insurance plan last year.
Who receives the 1095 C form and what is form 1095C purpose?
All full-time employees who worked for a minimum of 1 month in the organization the previous year will receive the 1095 C form.
What is a 1095 C form used for? With the information furnished in this form, the employee can file accurate tax returns. However, a copy of this form need not be sent to the IRS.
At the end of the employer, the information in form C determines whether the company has complied with the ACA and if there are any payment dues for the IRS.
What information is provided in the 1095 C form?
The 1095 C form contains detailed information about the company-sponsored healthcare coverage provided to the organization’s employees in the last year. This includes:
- Name of the employee
- Name of the employer
- Coverage type
- Dependents covered under the plan
- The period during which the employee was covered in the plan
- Mention of the cheapest premium the employee could pay for the plan
Key Differences Between 1095-A, 1095-B and 1095-C
Now that we know about forms 1095 a, 1095 b, 1095 c, and their related details, let us quickly take a look at the key differences between the three forms.
Here is the tabular format displaying the difference between 1095 a vs 1095 b vs 1095 c.
|
1095 A form |
1095 B form |
1095 C form |
| Purpose |
The purpose of this form is to report information to the IRS about employees who have undertaken a health insurance plan via the Health Insurance Marketplace.
The form is also given to individuals so that they can receive premium tax credits.
|
The purpose of this form is to authenticate that the person has some kind of health coverage, which is a requirement of the ACA. |
With the information provided in this form, the employee can file accurate tax returns.
For the employer, the information in Form C determines whether the company complies with the ACA guidelines and if the company owes anything to the IRS.
|
| Issuers |
This form is provided by the Marketplace provider from where the insurance plan has been taken. |
Form B can be issued by various insurance coverage providers, including insurance companies apart from Marketplace, government agencies, small businesses, employers offering self-insured coverages, etc. |
Applicable large employers (ALEs) issue form c, offering information to the IRS about health insurance coverage for every employee in the organization. |
| Receivers |
Employees who purchased their health plan from a Health Insurance Marketplace will receive this form from the insurance provider. |
Individuals/employees who have minimum essential healthcare coverage are eligible to receive this form from the entity that has issued the insurance coverage. |
All full-time employees of a company must receive this form to file accurate tax returns. |
| Deadline for Form Submission |
This form should be sent to individuals before mid-February every tax year. The last date is 28th February of every year. |
This form should be sent to employees by 31st January of the year. |
This form should be sent to employees by 31st January of the year. |
How to Use 1095 Forms for Tax Purposes
These forms do not need to be submitted to the IRS, but these forms play a pivotal role in tax purposes for both employers and employees.
These tax forms help to determine if employees and employers have fulfilled their mandate under the ACA.
With Form A, individuals can fill out Form 8962, requesting a refundable premium tax credit. The information also helps in filing an accurate income tax return with the IRS.
Form B must be sent to employees who are covered under the Employer Insurance plan. Employees require this form for tax preparations while filing their taxes individually.
Employees might store this form with tax records, but it is not required to be attached to the tax return documents.
Like Form B, Form C is also required to file accurate tax returns. However, a copy of this form does not need to be sent to the IRS.
Ensuring Compliance With 1095 Forms
Health insurance paperwork is vital for individuals as well as business organizations.
Understanding this paperwork is critical to ensure compliance with a wide array of regulations, including the Affordable Care Act (ACA).
IRS’s 1095 forms are regarded as important health coverage documents. By using forms 1095-A, 1095-B and 1095-C, the IRS seeks reports of health coverage information from employers, individuals, and health plan providers alike.
These tax forms help maintain compliance with reporting regulations and avoid IRS penalties.
These forms are designed to assist both the IRS and taxpayers in verifying whether individuals have the minimum essential health coverage necessary under the ACA.
For employers and business owners of all sizes, mismanaging health insurance paperwork might lead to serious financial and legal consequences.
FAQs
1. What is the difference between a 1095-A and a 1095c?
1095 A form deals with individual health coverage provided via the Health Insurance Marketplace. 1095 C form, on the other hand, covers health coverage employers provide to their employees. The size of the employer organization must be more than 50 employees.
2. What is the difference between a 1095-A and a 1095-B?
1095 A form deals with individual health coverage provided via the Health Insurance Marketplace. The 1095 B tax form provides reports to individuals covered under the minimum essential coverage, which is mandatory by the Affordable Care Act.
3. Can I Receive IRS Form 1095-A, Form 1095-B, and 1095-C All in One Year?
Yes, an individual can receive IRS Form 1095-A, 1095-B, and 1095-C all in one year. This depends on the health insurance plan you enrolled in the previous year and your employer and company size.
4. What happens if I don't get my 1095-A from the marketplace?
If you do not get your 1095-A from the marketplace, contact the insurance provider from the Marketplace from which you purchased the health insurance plan. You might need to amend the return if you received a voided or corrected Form 1095-A.
5. What is a 1095 form used for?
IRS form 1095 provides detailed information about the various healthcare insurance coverages you purchased or offered by your employer during the last calendar year. The information from the various 1095 forms helps file individual income tax returns.
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