Obamacare Tax Forms Are Coming to a Mailbox Near You

February 09, 2015

I just got done pitching out a foot-high pile of holiday sale catalogs, magazines that I never got to read over the holidays, and donation requests from charities and schools that for some reason didn’t feel like I paid them enough tuition while there as a student. Am I the only one out there who’s looking online for a new smaller mailbox?  But just when we thought it’s safe to downsize our mailboxes, the Affordable Care Act (also known as the “ACA” and “Obamacare”) and IRS regulations have added more mail to the winter pile-up, the new series of IRS information forms that support whether you have health insurance that complies with the “Obamacare” rules.  These forms started showing up late this January and will every year after.

The IRS now has the unwelcome responsibility of enforcing the Affordable Care Act, and doing so with reduced resources. 2014 is the first tax year when the ACA penalties and “tax” for not complying comes into play, and so the IRS has changed Form 1040, 1040A and 1040-EZ for 2014 to add a line to report whether you and your dependents had qualifying health care coverage during 2014. Anyone who bought insurance through the “Obamacare” marketplace will get Form 1095-A to provide proof of the qualifying coverage and provide the necessary numbers for lower-income buyers to qualify for a premium tax credit.

Optional in 2014 but mandatory for 2015 are Forms 1095-B and 1095-C. Form 1095-B is to be issued by all employer-provided health plans or individual market plans not part of the Marketplace. This form will prove the employee and/or family had qualifying coverage for all or part of the year. Form 1095-C is to be issued by all employers with over 50 employees to state whether the employer offered health care coverage for all or part of the year. Another new form, Form 8965, was created to allow exempted filers to claim a “Health Coverage Exemption” for coverage or to figure out if any uninsured tax is due, called an “Individual Shared Responsibility Payment.” (Isn’t that a nice name for a tax?)

Since the forms will come from health plans and don’t look like forms we’re used to, many recipients will be tempted to throw them away so be on the lookout for them. The new forms don’t need to mailed in with your taxes since the IRS is already getting all this information electronically, but they might affect your tax preparation. These forms are needed to let your tax preparer know (even if it’s you) that you had qualifying coverage during the year and thus avoid the Individual Shared Responsibility Payment.

Prior to the ACA, accountants and tax preparers didn’t have to worry about health insurance, but unfortunately for them reporting your health insurance coverage with your taxes is here to stay. So, while you were out ringing in the New Year, many employers and their accountants were wringing their hands getting ready for more reporting requirements and figuring out how to deal with this new responsibility. Anybody out there want tax simplification along with that mini-mailbox yet?