The Complete Guide to IRS Form 1095-A: Health Insurance Marketplace Statement
IRS Form 1095-A, the Health Insurance Marketplace Statement, is a crucial tax form for anyone who purchased health insurance through the Health Insurance Marketplace (also known as the “Exchange”). This form provides essential information needed to reconcile the Premium Tax Credit (PTC) you may have received or are eligible for, and to file your federal income tax return accurately. Understanding this form is vital to avoid errors that could lead to overpayment of taxes, underpayment and potential penalties, or delays in receiving your refund.
This guide provides a comprehensive breakdown of Form 1095-A, explaining its purpose, who receives it, how to read it, and how to use it to complete your tax return.
1. Purpose of Form 1095-A:
The primary purpose of Form 1095-A is to reconcile the Advance Premium Tax Credit (APTC). The APTC is a refundable tax credit that helps lower monthly health insurance premiums for individuals and families with moderate incomes who purchase insurance through the Marketplace. When you apply for coverage through the Marketplace, you estimate your income for the year. Based on this estimate, the Marketplace determines the amount of APTC you qualify for, and this amount is paid directly to your insurance company to reduce your monthly premium.
Form 1095-A provides the actual premium amounts, the actual Second Lowest Cost Silver Plan (SLCSP) premium (more on this later), and the actual amount of APTC you received throughout the year. This information is used to calculate the correct amount of PTC you were entitled to, based on your actual income and household size. This calculation happens on Form 8962, Premium Tax Credit.
2. Who Receives Form 1095-A?
You will receive Form 1095-A if you, or a member of your tax household, had health insurance coverage through the Health Insurance Marketplace for any part of the year. This includes:
- Individuals who enrolled directly through the Marketplace.
- Individuals who enrolled through a state-based Marketplace (e.g., Covered California, NY State of Health).
- Individuals who had APTC applied to their premiums.
- Individuals who had Marketplace coverage, even if they didn’t receive APTC.
- Families where different members had coverage through the marketplace.
Important Note: You will receive a separate Form 1095-A for each policy you had through the Marketplace. For example, if you switched plans mid-year, you’ll receive two forms. If two different family members had separate marketplace policies, each individual on their own policy will get a 1095-A form.
3. When Do You Receive Form 1095-A?
The Marketplace is required to send you Form 1095-A by January 31st of the year following the coverage year. For example, for coverage in 2023, you should receive your 1095-A by January 31, 2024. You may receive it electronically (if you opted in) or by mail. You can also typically access it through your online Marketplace account.
If you don’t receive your 1095-A by mid-February, contact your Marketplace immediately. Do not file your tax return without it (or with incorrect information).
4. How to Read Form 1095-A: A Section-by-Section Breakdown
Form 1095-A is divided into three parts:
Part I: Recipient Information
This section contains information about you (the policyholder) and your tax household.
- Box 1: Marketplace identifier: A unique code assigned to your state’s Marketplace.
- Box 2: Marketplace assigned policy number: The policy number assigned by the Marketplace. This is crucial for identifying your specific policy.
- Boxes 3-8: Your personal information: name, Social Security Number (SSN), date of birth, address. Verify this information is accurate.
- Boxes 9-11: Information about the individual who enrolled in the coverage, if it’s different from the recipient (e.g., if a parent enrolled a child).
- Boxes 12-15: Coverage start and end dates. This shows the period(s) the policy was in effect. If you had multiple policies, you’ll have separate forms for each.
- Boxes 17-20: Information about your spouse, if applicable.
Crucial Check: Ensure your name, SSN, and address are correct. Errors in this section can cause major problems with your tax return.
Part II: Coverage Household
This section lists all individuals covered by the policy.
- Boxes 21-32: Information about each covered individual: name, SSN (or other taxpayer identification number), start and end dates of coverage.
Crucial Check: Verify that everyone listed was actually covered by the policy, and that the coverage dates are accurate. If someone was not covered, or the dates are wrong, it can affect the PTC calculation.
Part III: Household Information
This is the most critical part of the form for calculating your PTC. It provides the monthly premium amounts and APTC information.
- Column A: Monthly enrollment premiums (Box 33): This is the total premium for your health plan before any APTC was applied. This is the gross premium.
- Column B: Monthly second lowest cost silver plan (SLCSP) premium (Box 34): This is the premium for the Second Lowest Cost Silver Plan (SLCSP) available to you through the Marketplace. The SLCSP premium is used as a benchmark in the PTC calculation, even if you didn’t choose a silver plan. This is arguably the most important number on the form. If you experienced any life changes during the year, contact the Marketplace. If this box is blank for any month that you had coverage, you must contact the Marketplace to get the correct SLCSP premium. You cannot complete Form 8962 without this information.
- Column C: Monthly advance payment of premium tax credit (Box 35): This is the amount of APTC that was paid to your insurance company each month to lower your premium.
Crucial Checks for Part III:
- Review each month individually. Ensure the amounts are accurate for each month you had coverage.
- Look for any blank entries in Column B (SLCSP). As mentioned, this is a common and significant error.
- Compare the total annual APTC (sum of Column C) to your records. Does it seem reasonable based on your payments?
5. Using Form 1095-A to Complete Form 8962 (Premium Tax Credit)
Form 1095-A is not filed with your tax return. Instead, you use the information on Form 1095-A to complete Form 8962, Premium Tax Credit. Form 8962 is where the actual reconciliation of the APTC happens.
Here’s a simplified overview of how the information is used:
- Information Transfer: You’ll transfer the monthly amounts from Columns A, B, and C of Form 1095-A to the corresponding sections of Form 8962.
- Income and Household Size: Form 8962 also asks for your actual modified adjusted gross income (MAGI) and your household size.
- PTC Calculation: Form 8962 calculates the correct amount of PTC you were eligible for, based on your income, household size, and the SLCSP premium.
- Reconciliation:
- If your APTC was less than the PTC you were eligible for: You’ll receive the difference as a refundable credit on your tax return (increasing your refund or reducing your tax liability).
- If your APTC was more than the PTC you were eligible for: You’ll need to repay the excess. This will increase your tax liability or reduce your refund. There are limits on how much you may need to repay, based on your income.
Important Considerations:
- Shared Policy Allocations: If you share a policy with someone who is not in your tax household (e.g., a divorced spouse), you’ll need to allocate the premium, SLCSP, and APTC amounts. This is done using Form 8962, Part IV. This can be complex, so seek professional help if needed.
- Life Changes: If you had any significant life changes during the year (e.g., marriage, divorce, birth of a child, change in income), you were required to report these changes to the Marketplace. If you didn’t, your 1095-A might be inaccurate, and your PTC reconciliation could be significantly off. You will likely need to make corrections through the Marketplace.
- Alternative Calculation for Marriage: If you got married during the year, there’s a special “alternative calculation” for the months before your marriage. This is also handled on Form 8962.
6. Common Errors and How to Correct Them
- Missing or Incorrect SLCSP (Column B): As emphasized throughout this guide, this is the most frequent and serious error. Contact the Marketplace immediately to obtain the correct information.
- Incorrect Personal Information: Errors in your name, SSN, or address can cause processing delays. Contact the Marketplace to correct the information.
- Incorrect Coverage Dates: Ensure the start and end dates of your coverage are accurate. Contact the Marketplace to correct any discrepancies.
- Not Reporting Life Changes: Failing to report life changes to the Marketplace throughout the year can lead to significant errors in your PTC reconciliation.
- Using the Wrong Form: Make sure you are using Form 1095-A, not Form 1095-B or 1095-C. These forms are for different types of health insurance coverage.
If you discover an error on your Form 1095-A after you’ve filed your tax return, you’ll need to file an amended return (Form 1040-X) along with a corrected Form 8962.
7. Where to Get Help
- The Health Insurance Marketplace: This is your primary resource for questions about your 1095-A and any discrepancies.
- IRS Website (irs.gov): The IRS website provides instructions for Form 1095-A and Form 8962, as well as publications and FAQs on the Premium Tax Credit.
- Tax Professionals: A qualified tax professional (CPA, Enrolled Agent, or tax attorney) can help you understand Form 1095-A, complete Form 8962, and file your tax return accurately. This is especially important if you have a complex situation, such as a shared policy allocation or significant life changes.
- Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE): These programs offer free tax help to qualified individuals.
Conclusion
Form 1095-A is a vital document for anyone who obtained health insurance through the Marketplace. Understanding this form and using it correctly to complete Form 8962 is essential for accurate tax filing and ensuring you receive the correct Premium Tax Credit. By carefully reviewing your 1095-A, reporting any errors promptly, and seeking help when needed, you can navigate the process successfully and avoid potential tax problems.