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How does Form 1095-A affect my taxes?

These are the ways Form 1095-A affects your taxes

by Paola
8 June, 2022
in Taxes
0
how does form 1095-a affect my taxes

Thanks to the Affordable Care Act, more people have the opportunity to purchase affordable health insurance through Premium Tax Credit (PTC) assistance. This form of financing allows eligible policyholders and family members to have financial aid for the entire year to reduce the number of their monthly insurance premiums.

You must have access to Form 1095-A to receive this credit. This document contains all the information to complete Form 8962 and apply for the tax credit. These tax loans directly impact your annual tax payments because PTC is a form of refundable financing that can reduce your tax bill or increase your tax refund.

What is Form 1095-A?

Form 1095-A, also known as a Health Insurance Marketplace Statement, is a document received by taxpayers who obtain health insurance through a Health Insurance Marketplace Company. This form serves as a record for the individual and does not need to be returned to the Government.

Personal information such as the start date of insurance coverage, the premium amounts paid each month, and any tax credit payments are entered on the document created this form under the Affordable Care Act regulations. Citizens who receive coverage under the Marketplace designed by these statutes are eligible for subsidized coverage or a tax credit.

Thanks to this law, citizens will no longer receive penalties for not being covered by health insurance.

Who receives this Form?

Form 1095-A is received by all taxpayers enrolled in a health plan through the federal Health Insurance Marketplace or a state marketplace. The individual does not need to submit the document, complete the information or indicate on the tax return that they received the paper and keep it as part of their record. If you are eligible for coverage, you must attach your Form 1095-A to Form 8962.

Check ➤  How is K -1 income taxed?

What information does Form 1095-A contain?

The document is composed of three parts. Each section includes the information necessary to fill in the boxes and apply for financing. In other words, it is an easy document to complete. In the following lines, we will explain how each part of the document works:

Part I: It is composed of personal information and your insurance coverage status. You will find the following:

  • Basic home information
  • The insurance company providing coverage
  • Start date of health policy
  • End date of insurance policy
  • Policy number in the Marketplace

Part II: A list of immediate family members who are covered by insurance

  • Name of covered person and Social Security Number
  • Start date of health coverage
  • End date of the health policy

Part III: More relevant information about the health coverage

  • Monthly premiums: Include all premiums paid and any premiums paid in advance on your behalf.
  • Dates of insurance coverage: Reflects the amount of coverage per month enrolled in the plan
  • Insurance Lowest Cost Silver Plan Premium (SLCSP): This is a tax tool to find your SLCSP. The number is used to calculate your premium tax credit.
  • Premium Tax Credit Prepayments: A column will reflect the number of prepayments made on your behalf to cover the monthly premium cost.

Upon receipt of the document, verify that all information is correct. If there are any inconsistencies, you can request a correction by going to this link to find out how to obtain the corrected form.

How does the form affect my taxes?

As we made clear at the beginning of this text, the form affects your taxes: the PTC is a form of reimbursable financing that can reduce the bill or increase your tax refund. Let’s develop this idea more precisely.

Check ➤  Is Pandemic Unemployment Assistance Taxable

If you had a plan and used tax credits to reduce monthly payments, you must report it on a federal tax return and set up the premium tax credit. This means you will compare the amount used to lower premiums to the amount of financial assistance you qualified for.

When an individual applies for health coverage through the Marketplace, the entity uses the information provided about the household and their income to establish the tax credit amount for which they were eligible.

The information on the form will help you match the discrepancy between the amount of financial assistance you used and the actual amount you should have earned based on your annual income.

Even if there is no discrepancy between the amount of the tax credit and the premiums used, you must report it on your tax return:

  1. If there is a discrepancy, it will affect your refund amount or the amount you must pay on your taxes.  
  2. If you do not file a tax return and match your financial aid, you will not qualify for Marketplace funding in future years.
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Contents

  • 1 What is Form 1095-A?
  • 2 Who receives this Form?
  • 3 What information does Form 1095-A contain?
  • 4 How does the form affect my taxes?

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