If you’re preparing to file your 2020 federal and state income tax returns, remember that you need to document more than just your income. Because the Affordable Care Act and California’s own Individual Mandate law both require most people to maintain qualified health insurance coverage, you will need certain forms to accurately report your coverage status.
Forms 1095-A and 1095-B were designed for this purpose. You should receive these in the mail soon.
Form 1095-A is of particular importance to anyone who receives a tax subsidy to help with the cost of their healthcare premiums. By inputting the correct amounts on your tax return, you will reconcile the credit on your return with any advance payments of the premium tax credits.
Form 1095-B simply provides information about your health insurance coverage. Those who maintained minimum essential coverage for the year are not liable for the shared responsibility payment (essentially, a penalty for failing to maintain coverage).
Even though the shared responsibility payment under the ACA is now set at 0 dollars at the federal level – essentially meaning there is no penalty for failing to maintain coverage – the state of California does impose its own penalty. So, you do want to ensure that you receive 1095-B and report the information accurately on your return.
No, you aren’t actually required to file the forms with your tax returns. However, you will need the information contained within the form in order to accurately file your taxes. And, you should keep a copy of these forms in your files, just in case your tax return is ever audited.
Watch your mail closely for these forms, which should be arriving soon, and consult with your tax professional if you have any questions about how to use them.