Getting Advance Payments of the Premium Tax Credit? Remember to Report Changes in Circumstances
If you purchased 2016 health care coverage through the Health Insurance Marketplace, you may have chosen to have advance payments of the premium tax credit paid to your insurance company to lower your monthly premiums. If this is the case, it’s important to let your Marketplace know about significant life events, known as changes in circumstances.
These changes – such as those to your income or family size – may affect your premium tax credit. Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit. Getting too little could mean missing out on premium assistance to reduce your monthly premiums. Getting too much means you may owe additional money or get a smaller refund when you file your taxes. If your income for the year turns out to be too high to receive the premium tax credit, you will have to repay all of the payments that were made on your behalf, with no limitation. Changes in circumstances that you should report to the Marketplace include:
- an increase or decrease in your income
- marriage or divorce
- the birth or adoption of a child
- starting a job with health insurance
- gaining or losing your eligibility for other health care coverage
- changing your residence
Changes in circumstances may qualify you for a special enrollment period to change or get insurance through the Marketplace. In most cases, if you qualify for the special enrollment period, you will have sixty days to enroll following the change in circumstances. You can find Information about special enrollment at HealthCare.gov.
The Premium Tax Credit Change Estimator can help you estimate how your premium tax credit will change if your income or family size changes during the year. This estimator tool does not report changes in circumstances to your Marketplace. To report changes and to adjust the amount of your advance payments of the premium tax credit you must contact your Health Insurance Marketplace.
Find out more about the premium tax credit and other tax-related provisions of the health care law at IRS.gov/aca
Remember that pesky question, “Did you have health insurance last year?” If you were enrolled in health coverage for 2015, you may receive a Form 1095-A, 1095-B, or 1095-C, which will answer that question for you. In addition, if you were an employee of an employer that was an applicable large employer in 2015, you may receive a Form 1095-C. If you don’t fall in either of these categories, you won’t receive a form.
So what is the difference between A, B and C?
- Form 1095-A, Health Insurance Marketplace Statement. The Health Insurance Marketplace sends this form to individuals who enrolled in coverage there, with information about the coverage, who was covered, and when.
- Form 1095-B, Health Coverage. Health insurance providers (for example, health insurance companies) send this form to individuals they cover, with information about who was covered and when.
- Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. Certain employers send this form to certain employees, with information about what coverage the employer offered. Employers that offer health coverage referred to as “self-insured coverage” send this form to individuals they cover, with information about who was covered and when.
Note: The deadline for the Marketplace to provide Form 1095-A is February 1, 2016. The deadline for insurers, other coverage providers and certain employers to provide Forms 1095-B and 1095-C has been extended to March 31, 2016. Some taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2015 tax return. While the information on these forms may assist in preparing a return, they are not required. Individual taxpayers will generally not be affected by this extension and should file their returns as they normally would.
For more information on the various nuances of these forms (like why you COULD get more than one), visit the IRS’s Questions and Answers about Health Care Information Forms for Individuals (Forms 1095-A, 1095-B, and 1095-C)
The premium tax credit is a refundable credit that helps eligible individuals and families with low or moderate income afford health insurance purchased through a Health Insurance Marketplace. To get this credit, you must meet certain eligibility requirements and file a tax return.
Here are four questions the IRS is hearing from taxpayers, along with answers and where to go for more information.
1. What is included in household income?
For purposes of the PTC, household income is the modified adjusted gross income of you and your spouse if filing a joint return, plus the modified AGI of each individual in your tax family whom you claim as a dependent and who is required to file a tax return because their income meets the income tax return filing threshold. Household income does not include the modified AGI of those individuals you claim as dependents and who are filing a return only to claim a refund of withheld income tax or estimated tax. For this and other detailed premium tax credit questions and answers visit IRS.gov/aca.
2. The IRS is asking to see my 1095-A. What should I do?
You should follow the instructions on the correspondence that you received from the IRS. You may be asked for a copy of Form 1095-A in order to verify information that has been entered on your tax return. Visit our Health Insurance Marketplace Statements webpage for more information about Form 1095-A and how to obtain a copy,
3. If I got advance payments of the PTC, do I have to file even if I never had a filing requirement before?
Yes. If you received the benefit of advance payments of the premium tax credit, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit. You must file a return and submit a Form 8962 for this purpose even if you are otherwise not required to file a return.
4. Marketplace says I did not file, but I did file before the extended due date. What should I do?
In advance of the open enrollment period that runs through January 31, 2016, the Marketplace sent Marketplace Open Enrollment and Annual Redetermination letters to individuals who might not have filed a tax return. Follow the instructions in the letter you received.
- Log in to your Marketplace account to update your 2016 Marketplace application.
- Check the box telling the Marketplace you reconciled your premium tax credits by filing a 2014 tax return and Form 8962.
- Update your Marketplace application by December 15, 2015.
- If you don’t update your Marketplace application, any help with costs you currently get will stop on December 31, 2015 and you’ll be responsible for the full upfront costs of your Marketplace plan and covered services.
- For more help visit HealthCare.gov or call your Marketplace.
IRS Health Care Tax Tip 2015-40 reminds taxpayers who received advance payments of the premium tax credit (PTC) in 2014 that they must file a 2014 individual income tax return with Form 8962 attached in order to reconcile their advance payments of the PTC with the amount of PTC they were actually entitled to. They should file as soon as possible – by July 31 if possible, in order to maintain their eligibility for timely advance payments of the PTC for 2016 health care coverage through the Health Insurance Marketplace (or Exchange). If they fail to do so, they may face a gap in advance payments of the PTC at the beginning of 2016.
Taxpayers who received advance payments of the PTC in 2015 and extensions until October 15 to file their 2014 individual income tax returns should not wait to file. They should file by July 31 in order to maintain their eligibility for advance payments of the PTC at the beginning of 2016.
For more information about the Affordable Care Act and the premium tax credit, visit IRS.gov/aca.