The tax season is rapidly approaching, and it’s as good a time as any for taxpayers to make sure they understand the relationship between their health insurance tax credit and the two tax forms which help calculate the amount of credit an individual is due. For 8962 (Premium Tax Credit) and Form 1095-A (Health Insurance Marketplace Statement) are necessary for individuals who have purchased their health coverage through the Marketplace.
Form 1095-A
This form comes from the Marketplace and lists all the information related to your taxes. If you’ve accepted health care coverage through the federal or state exchange, you should receive a Form 1095-A in the mail by January 31st, 2015. This statement is needed to calculate the Premium Tax Credit and is especially important if you’ve opted to subsidize your monthly insurance premiums by using an advance tax credit.
The 1095-A is different in appearance from the customary W-2 or 1099 that many taxpayers receive. Though it looks different, it is just as important and should be retained with all tax documents after the completion of the tax return. Copies of the 1095-A can be requested from the Marketplace if needed.
The Form 1095-A will contain the following information:
- Any advance premium tax credit received to help offset the cost of monthly healthcare premiums
- Information pertaining to the coverage of all individuals in the household covered under the plan
Form 8962
If you used the Marketplace to find healthcare coverage and were deemed eligible to receive a premium tax credit, you will need to use this form. Many individuals opt to use the tax credit throughout the year to help lower the amount they have to pay out of pocket for their monthly premiums.
If you’ve used this tax credit as a subsidy for your monthly premiums, you will need to complete Form 8962 and determine your actual tax credit allowance in comparison to your monthly subsidy. The actual allowance is related to your total income and family size for 2014. It’s important to note that the advance credit is paid directly to the insurance company.
If you fail to submit the Form 8962 Premium Tax Credit with your tax return, the IRS won’t process your return. In order to avoid a delay of any refund amount due, it’s critical that you review your tax return and make sure all required forms are completed. The IRS will notify you that you need to send a Form 8962 if you fail to include it with your return. If this occurs, you may lose your eligibility for an advance premium tax credit in the future.
