Navigating The ACA Tax Alphabet: Resolving Conflicts Between The 1095-A, 1095-B, And 1095-C

Implementing Health Reform. For the first time in 2015, taxpayers who had received premium tax credits through the health insurance marketplaces received a form 1095-A documenting their receipt of premium tax credits. The information found on the 1095-A is used by taxpayers for reconciling the advance premium tax credits (APTC) the taxpayers actually received during a year with those that they should have received, given their actual income for the year. The reconciliation determines whether the taxpayer must pay back some of the APTC received or may in fact be eligible for additional credit.

In 2016 for the first time taxpayers will also receive 1095-Bs, documenting minimum essential coverage that taxpayers received from employers, insurers, or government programs, and 1095-Cs documenting coverage that a taxpayer was offered or received from a large employer. 1095-Bs and 1095-Cs must ordinarily be provided to taxpayers by February 1 of a tax filing year, but for the 2015 tax filing year, the due date was delayed until March 31, 2016.

Although taxpayers who received advance premium tax credits (APTC) must provide information found on their 1095-As when they file their taxes, under Internal Revenue Service (IRS) guidance taxpayers can proceed with filing their 2015 taxes based on information they otherwise had about their coverage without waiting for 1095-Bs and 1095-Cs and will not have to amend their returns if they later find out that the information they relied on was inaccurate.

Taxpayers are, however, receiving 1095-Bs and 1095-Cs, as well as 1095-As, for 2015 and taxpayers and tax preparers are facing questions as to what to do when there are inconsistencies between the information provided on these forms. On March 4, 2016, the IRS released a guidance for tax preparers on how to handle these inconsistencies.

This guidance addresses six situations in which information on a 1095-B and a 1095-A might conflict and three situations where the information on a 1095-C and 1095-A might conflict. Conflicts between 1095-As and 1095-Bs might occur because:

• The information on one form or the other might be wrong. In these situations the taxpayer should contact the issuer of the form to straighten the situation out, as the wrong information will also be reported to the IRS.


• The taxpayer switched coverage during a month. The taxpayer had coverage for at least one day during a month from one coverage provider but coverage with another provider took effect during the same month, and thus both providers reported coverage for the same month. This should not affect APTC eligibility.


• The taxpayer was retroactively approved for coverage under a government program (such as Medicaid) for a month in which the taxpayer also received APTC, thus the taxpayer had overlapping coverage. The taxpayer would not cease to be eligible for APTC until the first day of the first calendar month after which government program coverage was approved, regardless of when retroactive coverage applied.


• A taxpayer who was receiving APTC became eligible for coverage under a government-sponsored program (Medicare or Medicaid) while receiving APTC. In this situation, individuals are given a grace period to apply for coverage during which they remain eligible for APTC. Individuals who fail to apply for the government program by the final day of the third full calendar month after they become eligible for the government program are ineligible for APTC as of the first day of the fourth calendar month following eligibility.


• A 1095-B reports supplemental coverage through a private insurance provider (for example, for a specified disease or accident policy). This does not affect APTC eligibility, thus a 1095-B reflecting such coverage is not relevant to tax filings. It is unclear why an insurer would file a 1095-B form for supplemental coverage since the purpose of the form is to reflect minimum essential coverage.


• A taxpayer was enrolled in a qualified health plan covered by APTC based on a determination that the taxpayer was not eligible for Medicaid or the Children’s Health Insurance Plan (CHIP). Subsequently the taxpayer was determined eligible for and was enrolled in Medicaid or CHIP. The guidance provides that once an individual is assessed or determined to be ineligible for Medicaid or CHIP, the individual otherwise eligible for APTC can continue to receive APTC for the duration of the coverage period, usually until the end of the coverage year, even if the person is subsequently determined eligible for Medicaid. The marketplace periodically checks for dual enrollment and asks people who are dually enrolled to return to the marketplace to discontinue APTC. The guidance is not clear on what would happen if an individual ignored this advice. It is clear that persons who receive a 1095-A and a 1095-B showing dual coverage should contact the marketplace.

Generally when a taxpayer receives a 1095-C stating that the taxpayer was offered affordable minimum value employer coverage, the taxpayer would have been ineligible for APTC. Coverage was affordable in 2015 if self-only coverage cost 9.56 percent or less of household income. It is possible, however, that even if a 1095-C shows individual coverage, an individual could have been eligible for APTC because:

• The form 1095-C is in error, in which case the employer should be contacted to ensure a correction, as the information will also be reported to the IRS.


• The taxpayer provided accurate information to the marketplace in good faith regarding employer coverage and was determined eligible for APTC. In this situation the taxpayer would be eligible for APTC even though the taxpayer would in fact have had an offer of affordable employer coverage (unless the taxpayer changed employers and was offered affordable coverage by the new employer over the course of the year, in which case the taxpayer should have reported the change to the marketplace).


• An employer offered affordable coverage only after an employee was already receiving APTC. In this case, the employee remained eligible for APTC until the first day of the first full month the employer coverage could have been effective but would have been ineligible after that date.