Form 1095-B Instructions: A Guide For Compliance
Form 1095-B, officially known as Health Coverage, provides key details about your healthcare coverage. This form verifies whether you had qualifying health insurance during the tax year, including coverage for your family members. While reading Form 1095-B instructions can feel complicated, this guide will clarify the essentials.
As a small business owner, understanding this form can help you avoid issues during tax season. Let's break down everything you need to know about Form 1095-B instructions.
Why Do I Get a 1095-B Tax Form?
The Affordable Care Act (ACA) mandates that most U.S. residents maintain minimum essential coverage (MEC). Think of this as the basic level of health insurance required, which helps stabilize healthcare costs across the board.
details your coverage information: who was covered under the policy, for which months they were covered, and the specific plan type. Understanding your plan type is important because it determines which forms are required.
Form 1095-B
If you obtained health insurance through the Marketplace, you would receive Form 1095-A instead of Form 1095-B. The information from this form will be used when completing your 1040 federal tax return, though it is not directly attached to the return.
You can find this form, along with detailed Form 1095-B instructions at the IRS website. While these instructions explain the requirements under Internal Revenue Code Section 6055, we'll simplify the language for better clarity.
Who Needs to Send the 1095-B?
You'll receive Form 1095-B from your coverage provider, not the other way around. Your coverage provider will depend on how you receive your minimum essential coverage. If you have government-sponsored health coverage like Medicare, Medicaid, or CHIP, they will be the ones to file.
For individuals with employer-sponsored health insurance through a smaller company, your insurance carrier would typically be the filer. Larger companies with self-insured group health plans will often report this information using Form 1095-C.
Understanding Your Form 1095-B
Navigating government forms can feel daunting, but breaking them down into sections makes it much easier. Here’s a closer look at each part of Form 1095-B:
Part I: Coverage Provider Information
This section identifies the entity providing your insurance. This could be your insurance company, a small employer offering a group health plan, or a government agency managing your healthcare program.
Line
Description
Example
1a.
Name of Provider
"Aetna" or "UnitedHealthcare"
1b.
Employer Identification Number (EIN) or Social Security Number (SSN)
The EIN is a unique 9-digit number for businesses, while an SSN is used for individuals.
Address and Phone
The main office location for your health insurance provider. This is where they can be reached by mail or phone.
Provider’s Contact Person
Provides the contact information of someone you can reach out to if you have any questions specifically regarding this Form 1095-B.
Part II: Covered Individual Information
This section focuses on you as the recipient of coverage. It includes your name, address, the specific months you had coverage during the tax year, and whether your spouse or dependents were also covered under the same policy. This information helps demonstrate compliance with the ACA's individual mandate, which requires individuals to maintain minimum essential coverage (MEC).
It’s important to note that while many states no longer have an individual mandate, this doesn't negate the requirement to file Form 1095-B. The IRS still uses this form to track trends and gather data on health insurance coverage across the country.
For example, California transitioned its individual mandate, known as the individual shared responsibility payment, to the state level. This means individuals are still required to maintain MEC and properly file forms related to their coverage or exemptions, or face potential penalties enforced by the California Franchise Tax Board during state tax filings.
Part III: Coverage Information
This section provides a detailed breakdown of your coverage for each month of the tax year. It indicates whether you were offered coverage, whether you enrolled in coverage and the type of MEC you had. Common types of MEC include employer-sponsored coverage, individual market insurance, or government-sponsored programs.
Part IV: Additional Information
Part IV may contain additional details or clarifications. This could include policy numbers, specific instructions from your healthcare provider, or state-specific information related to health insurance mandates.
For instance, if you're a California resident, you might find information here regarding California’s individual mandate and the state's Revenue and Taxation Code (R&TC) Section 61005, demonstrating compliance with state-specific requirements as well.
Interestingly, electronic Form 1095-C is accessible within certain HR and benefits platforms. Individuals can also conveniently access their Form 1095-C information online. These digital solutions are becoming increasingly popular, making healthcare information more readily available.
Navigating Those Tricky Form 1095-B Instructions
Now that you understand the structure of the form, let's address common questions about what to do with it and how to interpret those official instructions.
You Won’t Need to File It.
Rest assured, Form 1095-B is for informational purposes only and is not something you need to actively file with the IRS. While it is not part of your submitted tax return, keep it with your tax records for potential audits.
Coverage providers are required to send copies of Form 1095-B to both the IRS and the insured individual. Retain your copy for reference during tax preparation.
Focus on the Parts That Matter
Instead of getting caught up in the technical jargon, prioritize understanding Part II. This section verifies your coverage duration throughout the year and outlines the policy's start and end dates. These dates are essential for confirming compliance with the individual mandate (where applicable) and ensuring accurate tax reporting.
Remember, It's Just a Snapshot
Keep in mind that this form only reflects coverage details for a single tax year. While the information on the form serves as documentation for the year, it doesn’t replace documentation from previous years.
If you experienced changes in your healthcare coverage situation during the year—like losing coverage, switching employers, or changes to your income that might impact affordability—maintain records reflecting those changes. Having a comprehensive paper trail can be immensely valuable when it’s time to file your taxes.
FAQs about Form 1095-B Instructions
FAQ 1: Is the IRS Form 1095-B still required?
Although the federal individual shared responsibility payment associated with the Affordable Care Act no longer applies, the requirement for individuals to maintain qualifying health coverage persists. This requirement, along with the necessity to file Forms 1094-B and 1095-B for each covered individual, has shifted to the state level in numerous instances.
For example, California enforces its equivalent of the individual mandate, referred to as the individual shared responsibility payment, through state tax filings. Residents are obligated to submit a completed Form FTB 3853, Health Coverage Exemptions and Individual Shared Responsibility Penalty if they did not maintain minimum essential coverage (MEC) for themselves or their tax dependents.
To remain compliant with the California Franchise Tax Board’s requirements, filers must submit these forms by March 31st of the following tax year. Essentially, these forms are still necessary, even without a federal mandate, to help the government monitor health insurance trends and leverage data for future healthcare planning.
FAQ 2: How to file 1095-B electronically?
As an individual, you don’t file Form 1095-B electronically. Only the provider of your health insurance handles that responsibility. However, providers who are required to file a large volume of these returns (typically 250 or more) must submit them electronically to streamline the process and reduce paper waste. This process ensures timely and efficient data transmission to the IRS.
If you handle this type of filing for your company, familiarize yourself with the e-filing procedures and guidelines outlined in the IRS's Affordable Care Act section for employers. Understanding these procedures will help you meet the IRS requirements for reporting healthcare coverage information.
FAQ 3: How do I file taxes without Form 1095-B?
While having Form 1095-B can make filing your taxes smoother, you can still complete your tax return if you haven't received it. This applies if the form wasn’t required or wasn’t required to be sent to you.
Your 1040 form includes sections where you can indicate whether you had healthcare coverage. If the form should have been filed or sent to you, not having it could trigger inquiries from the IRS.
Stay Compliant With 1095 EZ
While navigating Form 1095-B instructions might seem complex, grasping their meaning and how they contribute to accurate tax filing can make the process much less stressful. Simply retain your copy for your records and refer to the information when completing your tax forms.
Simplify your healthcare compliance with Form 1095-B. Avoid tax season stress by understanding your coverage requirements and ensuring smooth filing. Whether you’re a small business owner or individual, our guide makes navigating Form 1095-B easier. Keep your records compliant, and let us handle the complexities of filing. Contact us today or create an account to get started—just answer a few questions, and we’ll take care of the rest for you!
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