1095A vs 1095B: Key Differences and What You Need to Know

Understanding the distinctions between Form 1095-A and Form 1095-B is crucial for taxpayers navigating health insurance reporting requirements. These forms document coverage details, impacting tax filings and potential penalties.

What Form 1095-A Reflects

Form 1095-A, the Health Insurance Marketplace Statement, provides information about health insurance coverage obtained through the Health Insurance Marketplace. It is essential for individuals enrolled in a qualified health plan via the Marketplace, as it outlines coverage specifics, including start and end dates, premium amounts, and any advance payments of the premium tax credit. This credit directly affects the taxpayer’s final tax liability or refund.

The form includes three sections: Part I identifies the recipient and policy issuer; Part II includes coverage details; and Part III lists monthly premium amounts and advance payments of the premium tax credit. Taxpayers use this information to reconcile advance payments with the actual premium tax credit they are eligible for, which is done on Form 8962, Premium Tax Credit. Discrepancies may lead to additional tax liabilities or refunds.

Accurate reporting on Form 1095-A is critical, especially if income or family circumstances changed during the year. Completing Form 8962 with correct data ensures the appropriate premium tax credit is claimed, based on actual income and family size.

What Form 1095-B Reflects

Form 1095-B provides details about health coverage obtained outside the Health Insurance Marketplace. It is issued by insurers, government programs like Medicaid and CHIP, and certain employers offering self-insured health plans. The form specifies the months the taxpayer and dependents had minimum essential coverage, which was previously required to avoid the individual shared responsibility payment under the Affordable Care Act (ACA).

Form 1095-B is straightforward: Part I identifies the primary insured; Part II details the employer sponsoring the coverage (if applicable); Part III includes the insurance provider’s information; and Part IV lists the covered individuals and the months they were insured. This ensures taxpayers can verify compliance with the ACA’s coverage mandate.

While the federal penalty for not maintaining minimum essential coverage was reduced to $0 starting in 2019, some states, such as California and New Jersey, have state-level mandates requiring residents to maintain coverage or face penalties. As such, Form 1095-B remains relevant for state tax filings.

Differences in Coverage Sources

Form 1095-A is specific to health insurance obtained through the Health Insurance Marketplace, which was established to expand access to private insurance plans and provide premium tax credits. Marketplace plans meet standardized coverage requirements, ensuring a baseline level of protection for enrollees.

Form 1095-B, on the other hand, reflects coverage obtained through employer-sponsored plans, government programs, or direct purchases from insurers outside the Marketplace. Employer-sponsored plans have long been a cornerstone of the U.S. healthcare system, providing coverage for employees and their dependents. Government programs like Medicaid and CHIP serve specific populations, such as low-income individuals and families.

The distinctions in coverage sources affect compliance and tax reporting. Form 1095-A recipients must reconcile advance premium tax credits, while Form 1095-B recipients primarily use the form to verify compliance with minimum essential coverage requirements. State mandates may impose additional obligations for Form 1095-B recipients.

Filing These Forms

Taxpayers with Form 1095-A must use its data to complete Form 8962 to determine the premium tax credit. This involves reconciling advance payments against the actual credits due, based on annual income. Errors in this process can lead to tax discrepancies or adjustments.

Form 1095-B serves as proof of health coverage but does not need to be filed with the tax return. Taxpayers should ensure its accuracy and retain it for records, particularly for compliance with state mandates or potential federal changes.

Handling Missing or Incorrect Forms

Missing or incorrect health coverage forms can cause complications, but resolving these issues promptly is important. Missing forms may result from administrative delays, while inaccuracies can stem from outdated records or clerical errors.

For missing or incorrect Form 1095-A, taxpayers should contact the Health Insurance Marketplace where they obtained coverage. Marketplace representatives can reissue the form or correct errors. Verifying all details is essential, as inaccuracies can affect the reconciliation of the premium tax credit on Form 8962. If discrepancies impact the tax filing, taxpayers may need to file an amended return using Form 1040-X.

For Form 1095-B, taxpayers should contact the insurance provider or the entity responsible for issuing the form, such as an employer or government program, to request corrections. Keeping detailed records of communications and corrections is advised, as this documentation may be needed for audits or state mandates. Taxpayers should also be mindful of the typical January 31st deadline for form distribution to address issues proactively.