1095 Forms: Everything To Need To Know!
Getting ready to file your taxes? Many of The Insurance People clients ask about 1095 forms: who needs them, what they’re for, and the differences between forms 1095A, 1095B, and 1095C. Here, The Insurance People give you the scoop on the different types of 1095 forms and why they’re important.
A little background info: 1095 forms were created when the government began mandating insurance, offering financial aid, and mandating that companies offer insurance. When Trump was in office, the mandates for these markets—individual insurance, the subsidized group market, and large group market—were removed. Currently, no one is mandated to be insured. As a result, the small group market is not required to contribute towards their health care, and therefore do not receive financial aid from the government. Therefore, nothing needs to be reconciled because no entity is required to provide proof of insurance.
1095 A forms are for individuals who purchase coverage from the Marketplace. The Affordable Care Act still requires that subsidies—tax credits you receive upfront that are paid directly to the insurance carrier—be supplied by the government. Subsidies have a direct impact on your monthly payment, lowering the monthly cost. For instance, if you have a $1,500 monthly payment and you receive a $1,000 monthly subsidy, the subsidy amount will have to be reconciled at the end of the calendar year. Since subsidies are supplied based on income level, you will have to pay back a prescribed amount. If you overpay your estimated amount, you’ll receive money back. If you underpay based on income, you will likely owe more during tax time.
1095 C forms are for the large market—companies with over 50 employees. These forms do not reconcile what an individual has borrowed, but rather it determines whether the employer has contributed enough toward employee insurance required by law. In the large group market, no given person may spend more than 9.5% of their income towards insurance for themselves and child. This does not include spouses. If an employer offers a benefit and you spend more than 9.5% of your income on this benefit, the employer is out of compliance and is liable. The employee is not penalized, but the employee must file the 1095 C to prove whether the employer gave them enough money throughout the year.
Because the 1095 B form is for small groups—under 50 employees—and small groups are no longer required by the government to contribute to employees’ coverage, 1095 B forms are currently obsolete. Since there is no current accountability for small groups, and no requirement of insurance coverage, nothing has to be reconciled.
Here’s what The Insurance People clients need to know: if you are a group client with under 50 employees, you will not receive a 1095 B form from us and there is no requirement to file one. If you are an individual client, you will be receiving your 1095 A form in the mail soon. If you don’t receive it, contact us and we’ll get it for you. These forms will have been sent out by January 31st.
Questions about your 1095 A form? We’re happy to help. Send us an email or call us during business hours.
