IRS Health Care Forms 1094 and 1095, Are You Prepared?
By: Mary Thompson, Capstone Brokerage President, November 24, 2015
This year the individual health care mandate has a new system to track if individuals have insurance. When Filing taxes for the 2014 year with a tax adviser, either in person or online, everyone was asked if they had individual medical insurance. The answer was a simple “yes” or “no”, and a box was checked, basically the requirement relied on the honor system.
What is the individual mandate?
The individual mandate portion of the Affordable Care Act (ACA) law states individuals will have to pay an annual fee or fine for not having health coverage. The penalty or fee is related to gross wages and family size. This year their is a new IRS form that will be used for individuals to file with their taxes based on the ACA requirements, the 1095-B
1095-B Forms
Individuals who have insurance through their employer or the private individual market will be receiving a 1095-B Form from their health insurance carrier. This 1095-B form will show the data to prove they have a Qualified Medical Insurance plan. This form the 1095-B will allow these individuals to avoid the individual mandate penalty when they file their taxes.
The 1095-B form should then be given to their tax adviser when they file in taxes for 2015. The IRS will also have a transmittal of Health Coverage from the health carrier (Sierra, HPN, Anthem Blue Cross, Aetna, Prominence, UHC, etc.) This allows them to coordinate and compare when you file your taxes in 2016. This is how the new tracking system will work under the ACA, in other words, no more honor system. If you do not have health coverage you can expect to pay a fee. Below is an explanation of the fee for 2015:
The annual fee for not having insurance in 2015 is $325 per adult and $162.50 per child (up to $975 for a family) or 2% of your household income above the tax return filing threshold for your filing status, whichever is greater.
1095-C & 1094-C Forms
The real complexity lies in the new IRS 1094-C and 1095-C forms, their requirements and who must file them. An Applicable Large Employer or ALE is a company, control group or affiliation containing 50 or more full-time and full-time equivalent employees (FTE) during the 2015 calendar year. An ALE must file a 1095-C for each employee who was full-time during any month of 2015.
These forms can be difficult, and payroll companies play an important role in retrieving individual employee data. Certain data should be obtained by the payroll company or internal payroll department, such as the employee hire date, hours worked, payroll deductions and gross earnings. This data is imperative to easing the employers ability to fill out the new required forms.
Many businesses think they need to hire outside attorneys of companies to help with these forms. However, before hiring an outside attorney, firm or payroll company (which will charge for these services), businesses should reach out to their Insurance Broker for guidance. It us also a good idea to print the forms and review them with your Broker to see if it is something you can complete on your own. Remember the 1094-C & 1095-C forms are only for Applicable Large Employers (ALE).
An insurance broker should provide more information about individual businesses needs and requirements. Here at Capstone Brokerage we will always provide a complimentary, custom analysis for clients and anyone needing assistance. It is smart to go over the forms in person as well to better the understanding on how to fill them out. Once the forms are explained more in depth they will seem less overwhelming. Making the decision on what filing option is best for your business is something each business should discuss with their broker. Follow our monthly Insight for a more in depth look at filing your taxes this year with the new Affordable Care Act Forms. Next Month we will feature Grace Taylor, Capstone Vice President of Benefits, and her in-depth insight into the new forms and requirements.
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