Tax & financial health
Brad Wenner—Getty Images/Moment Open
By Kara Brandeisky
March 9, 2016

This year, you may be receiving tax forms you’ve never seen before, all thanks to the Affordable Care Act, aka Obamacare. For the most part, these documents won’t make tax filing too much harder—with one big exception. Here’s what you need to know about this paperwork, depending on what kind of health insurance you had in 2015.

If you had health insurance from your employer all year…

For the first time this year, you should get a new form from your health insurance provider or employer verifying your coverage, but this won’t change how you do your taxes.

If your employer has more than 50 full-time employees, you should get a 1095-C; otherwise, you should get a 1095-B form. These documents include information about your coverage, but you don’t need them to file. In fact, you might not even get your copy before you do your taxes—employers don’t have to send one to you until March 31.

When you file, all you have to do is check a box on your 1040 saying that you had health coverage for the entire year. Do not send your 1095-B or 1095-C to the IRS with your return. Do keep the form in case you are audited and need to prove you had health coverage.

If you had Medicare or Medicaid all year…

Long story short: You don’t have to worry.

The Obama administration gave itself a pass this time, extending the 1095-B reporting deadline for Medicare another year, LifeHealthPro reports. So as a Medicare recipient, you may not get a 1095-B form this year. The federal government decided to send the forms only to people who might have difficulty proving they had health coverage, such as Medicare beneficiaries under age 65, new Medicare enrollees, and people who had Medicare for only part of the year.

Medicaid enrollees, on the other hand, should receive 1095-B forms.

Again, these forms will not change the way you do your taxes. Simply check the box on your 1040 saying you had health coverage all year and keep any 1095-Bs you do receive for your records.

If you had a health insurance plan bought on the marketplace…

Just like last year, you should get a 1095-A form. This will describe your health insurance policy and coverage history. Hang onto this one. If you received a subsidy to help pay for insurance, you’ll need this form to file.

Here’s why: Under the Affordable Care Act, Americans who make less than 400% of the poverty line ($97,000 for a family of four in 2015) can qualify for a subsidy to cover part of the cost of premiums on a marketplace plan. Technically, this is a tax credit, but instead of waiting until refund time to collect, you can elect to receive the credit every month so you’ll have help paying your premiums as you go.

However, since the subsidy is based in part on how much you earn, when you buy insurance you must estimate how much you expect to make over the coming year. Then, when you file your tax return, you need to reconcile your estimated income with your actual income to make sure you received the correct subsidy.

You do this reconciliation on Form 8962. Simply enter the information from your 1095-A, and you’ll see whether your tax credit was too big or too small.

Unfortunately, last year H&R Block found that 52% of Americans who received the credit underestimated their income and had to pay back part of their subsidy—$365 on average. If you owe money this year, you may want to go to Healthcare.gov and adjust your estimated 2016 income so you don’t have the same problem in 2017.

If you did not have health insurance for all 12 months of the year…

You may have to pay a tax penalty, under what’s called the individual shared responsibility provision of Obamacare. The penalty is calculated on a month-by-month basis, so you may owe it even if you were covered for part of the year.

The Kaiser Family Foundation estimates that the average tax for going without health insurance for all of 2015 is $661, but your exact penalty will depend on your situation. This year, the tax is either 2% of your income—capped at the national average price of a marketplace bronze plan—or $325 per adult in your family and $162.50 per child—capped at $975—whichever is higher.

Your tax software should calculate what you owe, or tally it yourself using the worksheet for Form 8965.

However, you might be able to get out of the tax. There are many ways to claim exemptions. You don’t have to pay if you had just a short gap in coverage, defined as no more than two consecutive months. For the purposes of this rule, you will be considered covered if you had health care for at least one day of the month.

You also don’t have to pay the tax if you didn’t meet the tax filing income threshold ($10,300 for an individual under 65 for 2015), or if an Obamacare bronze plan would have cost more than 8.05% of your income. You can apply for each of these exemptions on your tax return, or apply for other exemptions through the marketplace.

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