Form 1095-A, Health Care Exemptions, and Individual Shared Responsibility Payment (Penalty) for 2015

As we approach the beginning of the 2016 filing season, here are some reminders about the Form 1095-A, exemptions from the requirement to have health insurance, and the increase in the individual penalty (individual shared responsibility payment) amount for 2015 federal income tax returns.

Importance of Form 1095-A 
In early 2016, the Form 1095-A (Health Insurance Marketplace Statement) will be received by the approximately 10 million individuals that obtained their 2015 health insurance at the Federal or a State Marketplace. The Form 1095-A is needed by these taxpayers in order to complete the 2015 Form 8962 (Premium Tax Credit) to calculate their premium tax credit for 2015 and, for those who received a subsidy, to complete the reconciliation of the subsidy with the actual credit.

The 1095-A should be received:

• By those who used the Federal Marketplace – by January 31, 2016
• By those who used a State Marketplace – Early February 2016

A copy of the Form 1095-A will be available online for those who used the Federal Marketplace via their account on healthcare.gov. It may also be available online for those who used a State Marketplace as well.

Also, any taxpayer that received a subsidy must complete the Form 8962 and include it with their 2015 federal return. If the Form 8962 is not included with the original federal return, the processing of the return will not be completed until a completed Form 8962 is sent to the IRS.

Health Care Coverage Exemptions
Most individuals who did not have health insurance for all or part of 2015 probably qualified for an exemption. Therefore, it is important that before any penalty is calculated that an individual determines whether they may qualify for a health care coverage exemption.

If an individual qualifies for a health care coverage exemption, they must complete the applicable parts of the 2015 Form 8965 (Health Coverage Exemptions) and include it with their 2015 federal return.

To see a full listing of the exemptions and whether the applicable exemption must be applied for at the federal marketplace or can be requested when the 2015 federal return is filed, see the Health Care Exemptions section of the How the Affordable Care Act Affects Individuals on the Crosslink Tax Resource Center.

If an individual needs help in determining whether they qualify for an exemption, a Find Exemptions tool is available on the healthcare.gov website.

Individual Penalty (Shared Responsibility Payment) for 2015
If it is determined that an individual does owe a penalty for 2015, it is calculated as the greater of: 

• 2% of the individual’s income that exceeds their 2015 filing threshold (personal exemptions plus standard deduction for their filing status);

Or

• A flat dollar amount that is assessed for the taxpayer, spouse, and dependents as follows:
  • $325 for taxpayer, spouse, and dependents over age 18
  • $162.50 for each dependent under age 18
  The maximum family flat dollar amount for 2015 is $975.

The penalty amount is limited for 2015 to the annual national average premium for a bronze level health plan available through the Marketplace which is $2,484 per individual ($207 per month per individual) with a cap of $12,470 for a family with five or more members ($1,035 per month).

See pages 13 – 17 of the draft 2015 Form 8965 Instructions for more information on how the penalty is calculated.