1095-C but No Health Insurance: What It Means for Your Taxes

A 1095-C form is sent to employees by certain employers to report health insurance offers, but receiving one doesn’t necessarily mean you had active coverage. This can cause confusion when tax season arrives, especially if you didn’t enroll in a plan.

Receiving a Form Despite Having No Active Coverage

Employers with 50 or more full-time employees must send a 1095-C to anyone classified as full-time for at least one month during the tax year, even if they declined coverage. The form primarily reports the availability of insurance, not actual enrollment.

Part II of the form details whether coverage was offered, whether it met IRS affordability guidelines, and the months it was available. If Line 16 contains a code such as 2F, 2G, or 2H, it indicates the employer met affordability requirements or that you were in a waiting period. The IRS uses this information to verify employer compliance with the Affordable Care Act (ACA).

You may receive a 1095-C even if you were only briefly eligible for coverage. For example, if you started a job but left before benefits took effect or if your employer classified you as full-time under ACA rules based on variable hours, you could still receive the form. This does not mean you had coverage or owe a penalty.

Tax Filing Factors to Consider

A 1095-C does not impact your tax liability but helps the IRS verify ACA compliance. Since the federal penalty for not having health insurance was eliminated in 2019, the form does not affect federal taxes. However, some states—California, Massachusetts, New Jersey, Rhode Island, and the District of Columbia—still require residents to have coverage. If you live in one of these states, you may need to provide proof of insurance or pay a state penalty.

Although you don’t need to submit the 1095-C with your tax return, reviewing it for accuracy is important. Errors in reported coverage offers can affect eligibility for premium tax credits if you purchased insurance through the Health Insurance Marketplace. The IRS cross-checks employer-reported data with Marketplace records to ensure individuals did not improperly claim subsidies. If your employer incorrectly reported that you were offered an affordable plan, you may need to dispute this to avoid repaying excess credits.

If you opted for Marketplace coverage instead of an employer-sponsored plan, you must reconcile any advance premium tax credits using Form 8962. If your employer’s 1095-C indicates you had access to an “affordable” plan, you may be ineligible for subsidies, even if you declined the employer’s offer. This could result in having to repay some or all of the credits when filing your return.

Resolving Mistakes or Missing Items

Errors on a 1095-C can complicate tax filing, especially if the reported information does not match your employment records. A common issue is incorrect coverage eligibility dates, which may suggest you were offered insurance when you were not. This can be particularly problematic in states with individual mandates, as it may incorrectly indicate that you should have been covered.

If you find discrepancies, contact your employer’s human resources or benefits department. Employers are responsible for ensuring the form’s accuracy before submitting it to the IRS. If an error is confirmed, they must issue a corrected 1095-C. While there is no strict deadline for corrections, addressing the issue early can prevent tax filing delays or IRS disputes. If your employer is unresponsive, filing Form 8809 for a tax extension may give you more time to resolve the issue.

If you were a full-time employee for part of the year but never received a 1095-C, check with your employer. Employers must provide these forms by March 1, 2024 (March 31 if sent electronically). If your employer does not furnish the form, you can still file your taxes using year-end pay stubs or other employment records to verify your insurance status. The IRS does not require you to submit the form with your return, but having it ensures your records align with IRS data.

Additional Documents That May Help

A 1095-C is just one document related to health coverage. Other forms may provide more clarity on your insurance status and tax obligations.

– Form 1095-B: Issued by insurance providers, including self-insured employers, this form confirms actual enrollment in a qualifying health plan. If you were covered through a spouse’s employer, Medicaid, or another program, this serves as official proof.
– Form 1095-A: If you purchased insurance through the Health Insurance Marketplace, this form details your monthly premiums, any advance premium tax credits, and the type of coverage obtained. It is necessary for completing Form 8962 to reconcile premium tax credits. Errors on this form can affect refunds or tax liabilities, so reviewing it for accuracy is essential.

Ensuring all health coverage documents are correct before filing can help avoid tax complications.