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Form 1095-A



Definition

Form 1095-A, also known as the Health Insurance Marketplace Statement, is a tax form issued by the US government’s Health Insurance Marketplace. It provides information about health insurance coverage acquired through the Marketplace. Individuals use the details provided on this form to fill out their federal tax return and determine eligibility for premium tax credits.

Phonetic

The phonetics for the keyword “Form 1095-A” would be: “f-aw-r-m wʌn ˌoʊ ˌnaɪn faɪv ˈeɪ”

Key Takeaways

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  1. Proof of Insurance: Form 1095-A, also known as the Health Insurance Marketplace Statement, serves as proof that an individual and their family had health coverage throughout the year. It’s an essential document when it comes to tax preparation, especially for individuals who purchased health insurance from the marketplace.
  2. Tax Credit Calculation: Form 1095-A assists in determining whether you’re eligible to receive a premium tax credit. It provides information about the months of coverage, total amount of monthly premiums, and the amount of advance payments of the premium tax credit. This information is crucial to reconcile the amount you’ve received in advance and the actual tax credit you’re eligible for.
  3. Record Keeping: 1095-A helps to keep adequate records. This document is essential not only for current year’s tax filing but also for future reference in case of any discrepancies or audits. It’s advised to keep a copy of Form 1095-A with other important tax documents for at least three years.

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Importance

Form 1095-A, also known as the Health Insurance Marketplace Statement, is essential in the context of business and finance because it contains the information required to complete an income tax return for those who or their family members bought health insurance independently through a Health Insurance Marketplace. The information it holds includes the coverage period, covered individuals, and the monthly premium amount of the health plan. The form is also critical to determine whether individuals can avail themselves of premium tax credits. Hence, correct information on Form 1095-A is vital for accurate tax filing and avoiding possible penalties.

Explanation

Form 1095-A, also known as the health insurance marketplace statement, serves a pivotal role in the administration of the premium tax credits used by individuals purchasing health insurance through the marketplace under the Affordable Care Act (ACA). The purpose of this form is to provide the necessary information for taxpayers to reconcile the tax credits they received during the year. This form is prepared by the marketplace and includes information about the marketplace coverage, amount of premium, amount of advance premium tax credit payments, and the premium of the second lowest cost Silver plan (SLCSP), which is crucial for tax-related computations.The Form 1095-A is used for two main purposes. Firstly, it enables taxpayers to calculate the correct amount of their Premium Tax Credit (PTC) on their annual tax returns. If the advance credit payments were more than the total of the premium tax credit calculated, then the taxpayers might have to pay back the excess amount. If the credit was less than the total premium tax credit calculated, then the taxpayers could get a refund for the difference. Secondly, this form serves as a proof of health coverage acquired through the Marketplace, which helps taxpayers to accurately respond to the health coverage questions on their federal tax returns. Therefore, this form plays a crucial role in the successful functioning of the ACA marketplace and the federal tax system.

Examples

Form 1095-A, also known as the Health Insurance Marketplace Statement, is used to report certain information to the IRS about individuals who enroll in a qualified health plan through the Health Insurance Marketplace. Here are three real-world examples of its usage:1. Individual Health Coverage: John, a self-employed person who doesn’t get health insurance through an employer, purchases health insurance through the Health Insurance Marketplace. At the end of the year, he receives a Form 1095-A, which states the monthly premium amounts he has paid, the premium for the second lowest cost silver plan (SLCSP), and any advance payment of premium tax credit. John uses this information to fill out a Form 8962 to reconcile his actual premium tax credit with the advance payments he received.2. Changing Work Situations: Sarah lost her job in April and her employee-sponsored healthcare ended. She enrolled in health insurance through the Marketplace for the rest of the year. She’d receive a Form 1095-A for the months she was covered by the Marketplace plan. She would use this information along with her Form 1095-B or 1095-C (from her employer-sponsored coverage) when filling out her income taxes.3. Family Plan: The Smith family has a policy through the Marketplace that covers both parents and three children. They have been receiving advance payments for the premium tax credit throughout the year. At the end of the year, they receive a Form 1095-A, which provides the total premium paid, the amount of advance payment, and any changes in coverage during the year. The Smith family uses Form 1095-A to prepare their income tax return and reconcile their premium tax credit.

Frequently Asked Questions(FAQ)

What is a Form 1095-A?

Form 1095-A, also known as the Health Insurance Market Statement, is a tax document that you receive from the Health Insurance Marketplace if you purchased health coverage there.

What is the purpose of Form 1095-A?

The main purpose of Form 1095-A is to provide information you will need to complete Form 8962, Premium Tax Credit (PTC). This helps when you’re filing your annual federal tax returns and need to calculate your premium tax credit.

When should I expect to receive my Form 1095-A?

The Health Insurance Marketplace sends out Form 1095-A by mail by early February for the previous tax year. You might also receive it electronically if you have chosen that option.

What information does Form 1095-A include?

Form 1095-A includes information about your insurance policy, your premiums (the cost you pay for insurance), any advance payment of premium tax credit and the people in your household covered by the policy.

How do I use the information in my Form 1095-A?

You will use the information from your Form 1095-A to calculate your premium tax credit and reconcile the credit on your tax return using Form 8962.

What if I don’t receive my Form 1095-A or the information is incorrect?

If you do not receive your Form 1095-A by early February or if any information on the form is incorrect, you should contact the Health Insurance Marketplace directly to correct the issue.

What should be done if my Form 1095-A shows I received more advance payments of the premium tax credit than I’m eligible for?

If your Form shows you received more advance payments than you’re eligible for, you could owe money back. This will be calculated when you file your tax return using Form 8962.

Do I have to wait to file my tax return if I don’t have my Form 1095-A by tax time?

Yes, you should not file your tax return until you have received your Form 1095-A. The information on this form is necessary to accurately complete your tax return. If you haven’t received your form by early February, contact the marketplace directly.

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