Corrected Tax Form 1095-A

If you bought health insurance in 2014 through the federal health insurance marketplace (aka, healthcare.gov) AND you collected a subsidy from the government to help you pay for your coverage, then you should have received a tax form 1095-A in the mail during late January or early February, 2015.

IRS Form 1095-A – Health Insurance Marketplace Statement — is new for the 2014 tax season, and provides details of how much you paid in premiums, how much subsidy you received, and information used to calculate how much subsidy you should have received.

Recently, government officials discovered errors in approximately 800,000 1095-A forms.

Corrected forms will be sent in early March.

What Was the Error on Some 1095-A Forms?

Column B in Part III of the 1095-A statement shows, by month, the premium of the second lowest cost silver plan (SLCSP).  SLCSP is used to calculate whether or not you received the right amount of subsidy.

SLCSP is incorrect on some people’s form.

How Will You Know if Your 1095-A is Wrong?

You can sign in to your account on healthcare.gov to find out if your form is affected by the error. Only about 20% of forms contain an error.

What Should You Do if Your 1095-A is Wrong?

If you have already filed your 2014 tax return

The Treasury Department announced that if you already filed your taxes using an incorrect 1095-A, you do not need to refile.  Also, in the event that refiling with the corrected form would result in additional taxes, you will not owe anything more.

However, you may want to refile with the corrected form if the corrected SLCSP is higher than the incorrect SLCSP.  In that case, you may be be entitled to more money back. Most experts recommend if the difference is slight, it may not be worth the time and expense of refiling. Please consult a tax professional for specific advice.

If you have not yet filed your 2014 tax return

Wait to file your return until you have received your corrected form 1095-A.

Corrected forms are expected to be mailed in early March. Your account on healthcare.gov will also be updated once the corrected form is available.

Visit healthcare.gov’s online tool to find your correct SLCSP if you want to file your taxes before your corrected form arrives.

If you have any questions about your health insurance coverage, please don’t hesitate to call us at (703) 707-8270.

For more information about tax filing with the Affordable Care Act, click here.

Please consult a tax professional for specific tax advice.

 

 

Tax Filing with the Affordable Care Act

With January behind us, it’s time to start thinking about filing your 2014 income taxes.

By now, you should have received most, if not all, of your tax forms and notices from your employer(s), banks, mortgage company, financial institutions, etc. — and, if you bought health insurance on the exchange — the Marketplace.

As we posted several weeks ago, the upcoming tax season promises to be complicated for those who received a subsidy on their health insurance, as well as those who did not have coverage for more than 3 months in 2014.

Here’s what to expect:

IRS Form 1095-A – Health Insurance Marketplace Statement

You should have received Form 1095-A from the Marketplace if you or a family member enrolled in health insurance through the health insurance marketplace in 2014.

Part I of Form 1095-A includes details about you — your name, SSN, date of birth, etc. — and your 2014 coverage — the state where you bought it, the name of the insurance company, and the dates your coverage started and ended.

Part II lists the members of your household covered on your plan.  Only those people who you told the Marketplace you would claim on your tax return will be listed here.

Part III details the following, by month:

1. The premium you paid
2. The premium of the second lowest cost silver plan (this will be used when you file your return to help calculate whether or not you received the right amount of subsidy)
3. The amount of subsidy you received (referred to by the IRS as a premium tax credit or PTC).

Line 33 of Part III includes the sum of each column, giving you the annual totals of each — this will come in handy when you’re ready to file!

You will use the data included on Form 1095-A to complete Form 8962 — Premium Tax Credit (PTC).

IRS Form 8962 – Premium Tax Credit (PTC)

If you received a 1095-A, you must complete Form 8962 and submit it with your Form 1040, 1040A or 1040NR when you file your 2014 taxes.

The IRS will use Form 8962 to reconcile whether you received too much or too little in the way of a premium subsidy for your health insurance last year.

You also must file Form 8962 if you were eligible for a PTC but did not collect the subsidy in advance, and now want to claim it.

If the form looks complicated that’s because it’s complicated!

IRS Form 8965 – Health Coverage Exemptions

The Affordable Care Act’s individual mandate requires that most Americans have health insurance by January 1, 2014.

If you did not purchase health insurance in 2014 because you are exempt from the individual mandate, you must complete IRS Form 8965.

Important:  if you have a Marketplace-granted coverage exemption you must provide an Exemption Certificate Number on Form 8965.  It takes some time for the Marketplace to process exemptions, so don’t delay in submitting your request!  Click here for more information.

Tax Penalty

If you were uninsured for more than 3 months during 2014 and you did not have a valid exemption, you will be assessed a penalty tax when you file your 2014 tax return.

The penalty will be equal to $95 per adult plus $47.50 per child, up to a family maximum of $285 OR 1% household income, whichever is GREATER.

The penalty increases for 2015 and 2016.  Click here for details.

The IRS will deduct your penalty from any refund you are due.  And, your penalty amount will be added to your tax bill if you owe money.

Start Early

Because of the extra complications this year, we recommend you get started on your taxes as early as possible.

The IRS has said repeatedly it does not expect to be able to manage the high volume of calls it will receive.  If you’re filing your tax return on your own, your best bet is to get it done quickly and avoid long delays on the IRS’s phone lines as we get closer to the April 15 filing deadline.

Several tax preparation firms have put together helpful information regarding the reporting requirements surrounding the Affordable Care Act.  We encourage you to take advantage of those resources as well!

Please consult a tax professional for specific tax advice.

 

 

 

How Will the Affordable Care Act Affect my Taxes?

Have you started thinking about filing your 2014 taxes?

April 15 may be a few months away, but this year — the first year the Affordable Care Act (ACA) is in effect —  filing taxes will be more complicated for millions of Americans.

That’s because certain provisions of the new law — namely, penalties and subsidies — will be reconciled at tax time.

If you got health insurance through your employer and were covered for all of 2014, filing your taxes will be not much different than in years past; you will simply check a box indicating you were covered.

But for those who either went without coverage for all or part of 2014, or those who collected a subsidy to help buy coverage on the exchange, things may get tricky, with new forms to fill out and new calculations to make.

If You Were Uninsured for All or Part of 2014

The individual mandate provision of the ACA requires most Americans to have health insurance starting January 1, 2014.

If you went for 3 consecutive months or more during 2014 without health insurance, you will be assessed a penalty unless you are exempt from the individual mandate — and can prove it.

The IRS will deduct the penalty you owe from any tax refund you may be due.  And if you aren’t expecting a refund, don’t think you’re in the clear.  You will be assessed interest if you don’t pay the penalty on time.  Furthermore, the IRS can deduct any amount you owe from future refunds for up to 10 years!

Planning tip: Avoid a penalty for 2015 by purchasing 2015 health insurance during open enrollment until 2/15/15.  To get an instant quote click here for plans without a subsidy; click here for plans with a subsidy.

Claiming an exemption can get tricky because, depending on the reason, you may need to actually apply for the exemption — either in advance through the health insurance exchange or on your tax return.  Click here to learn more about the exemptions available and how to apply for each one.

Planning tip: Be sure to allow yourself enough time when applying for an exemption. Some require a few weeks to process and involve waiting for an exemption certification number to enter on your tax return.

If You Bought Subsidized Health Insurance on the Exchange

If you collected a subsidy in 2014 to help pay for your health insurance, you may be surprised to learn that the IRS will reconcile the amount of subsidy you collected with the amount you should have gotten based on your actual 2014 income.  Remember, if you collected a subsidy in advance, the amount you received in 2014 was based on your anticipated income for the year.

If your actual income ended up being higher than anticipated, you could owe money back.  Conversely of course, if your income was below what you anticipated, you may get a refund.

Also, any changes in life circumstances — divorce, marriage, job status change, etc. — can also have an impact on your subsidy amount.

Planning tip: You may be able to reduce your 2014 income enough to qualify for the subsidy you collected by, for example, contributing money to a retirement account. Contributions for 2014 can be made through April 15, 2015. Consult a tax professional for details.

Plan Ahead!

Industry experts predict the IRS will be inundated with calls from taxpayers and tax preparers sorting through new reporting rules and regulations.  The IRS itself has said it is unlikely to be adequately prepared to answer the volume of calls it receives.

Just another reason to get ahead of the curve and start looking at things now.

If you need more information about your options, or need to purchase 2015 health insurance, please contact our office by phone:  1-888-396-2341 or 703-707-8270.

Open enrollment runs through February 15, 2015.  You can view your options for 2015 health insurance:

• Click here if you may be eligible for a subsidy in 2015.
• Click here if you will not be eligible for a subsidy in 2015.