On Oct. 18, 2017, the Internal Revenue Service (IRS) released guidance for individuals answering questions about health coverage on their federal tax return. Beginning in the 2018 reporting year, when individuals prepare their 2017 federal tax return, they must indicate if they and others on their return:
- Had minimum essential coverage for the year, or
- Qualified for an exemption from having health coverage, or
- Are paying the individual shared responsibility payment.
Employers may want to make sure their employees are aware of their need to fully complete their tax return with the information.
The 2017 tax year is the first time the IRS will not accept tax returns that do not include the above information. If individuals do not provide the information:
- Electronic returns will not be accepted until the information is provided.
- Paper returns may be suspended and any refund delayed until the IRS receives the additional information.
While last year, the IRS indicated they would process tax returns that did not provide the information, the IRS did state individuals would still be subject to a penalty if they did not comply with the Affordable Care Act's shared responsibility requirement, sometimes referred to as the individual mandate. In 2018, taxpayers:
- Must indicate coverage by responding on line 61 on the 1040, or
- Must refer to the supplemental filing 8965 to determine if they are exempt or to determine the amount they owe as a penalty for not maintaining coverage. This exemption or financial responsibility information must be included with their tax return.
- Are required to support the ACA law and pay what they may owe when they file their tax return.
Although those filing taxes are not required to attach the 1095 form to their federal tax return, it is likely that the employee or tax preparer will be looking for this form to prepare their tax return on time.
For fully insured employers, UnitedHealthcare is required to furnish Form 1095-B to subscribers on or before January 31, 2018 and submit reports to the IRS.
Self-funded applicable large employers (ALE) must furnish Form 1095-C to subscribers on or before January 31, 2018 and submit reports to the IRS by Feb. 28, 2018 or April 2, 2018, if filed electronically.
For more information refer to the IRS Tax Information Center or consult with your tax professional.