Affordable Care Act – What to expect when filing your tax return

Health care information forms

Taxpayers who are preparing to file their tax returns may receive multiple health care information forms that they can use to complete their return. The forms are:

Depending upon your specific circumstances, the Health Insurance Marketplace, health coverage providers and certain employers may provide information forms to you to help you accurately report health coverage information for you, your spouse and any dependents when you file your individual income tax return. Health coverage providers, employers and the Marketplace will also file these forms with the IRS.

If you are expecting to receive a Form 1095-A, you should wait to file your income tax return until you receive that form. Some taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their tax return and it is not necessary to wait for Forms 1095-B or 1095-C in order to file. While the information on these forms may assist in preparing a return, they are not required. Individual taxpayers should file their returns as they normally would.

The deadline for the Marketplace to provide Form 1095-A is January 31 of the year following the coverage year.

The IRS has posted a set of questions and answers about the Forms 1095-B and 1095-C. The questions and answers explain who should expect to receive the forms, how they can be used, and how to file with or without the forms.

Individual shared responsibility provision

For tax year 2019 and later returns

Under the Tax Cuts and Jobs Act, the amount of the individual shared responsibility payment is reduced to zero for months beginning after December 31, 2018.

Beginning in tax year 2019, Forms 1040 and 1040-SR will not have the “full-year health care coverage or exempt” box and Form 8965, Health Coverage Exemptions, will no longer be used. You need not make a shared responsibility payment or file Form 8965, Health Coverage Exemptions, with your tax return if you don’t have a minimum essential coverage for part or all of the year.

For tax year 2018 and prior returns

The Affordable Care Act calls for all taxpayers to do at least one of three things:

Have qualifying health insurance coverage for each month of the year
Have an exemption from the requirement to have coverage
Make an individual shared responsibility payment when filing federal income tax return.

Under the Tax Cuts and Jobs Act, taxpayers must continue to report coverage, qualify for an exemption, or pay the individual shared responsibility payment for tax years 2017 and 2018.

Most taxpayers are in the first category and have qualifying health insurance coverage for each month of the year. They will simply check a box on their return to indicate that everyone listed on the front of the return has qualifying health care coverage for the entire year. Some taxpayers will have to file a Form 8965 PDF to claim an exemption from the requirement to have health care coverage.

Taxpayers who do not have qualifying health care coverage and who do not qualify for an exemption will need to make an individual shared responsibility payment when they file their tax returns. Some taxpayers will find that they qualify for an exemption for part of the year but must make a payment for another part of the year. These taxpayers should pay close attention to guidance that covers their situation.

Almost all taxpayers must report health care coverage, claim a coverage exemption or report a shared responsibility payment. The IRS will not accept tax returns that do not reflect at least one of these options if filed electronically. If filed on paper, returns that do not reflect at least one of these options will take longer to process and any refunds will be delayed. Taxpayers should respond promptly to IRS correspondence about their health care coverage.

Exemptions for tax year 2018 and prior returns

Taxpayers who did not maintain coverage throughout the year and meet certain criteria may be eligible to obtain an exemption from coverage. How an individual obtains an exemption depends upon the type of exemption. Some exemptions can be obtained only from the Marketplace other exemptions are claimed only when you file your tax return, and yet others can be obtained from the Marketplace, or claimed when you file your tax return.

Claim or report coverage exemptions on Form 8965, Health Coverage Exemptions PDF, and file it with Form 1040, Form 1040-A, and Form 1040-EZ. Each of these forms can be filed electronically.

Individuals who are granted a coverage exemption from the Marketplace will receive a notice with a unique Exemption Certificate Number, also known as an ECN. Keep this notice with other important tax information and enter the ECN on Form 8965 in Part I, Marketplace-Granted Coverage Exemptions for Individuals. Individuals who applied for an exemption with the Marketplace but do not have an ECN may enter “PENDING” in Part I of Form 8965. An ECN is not required for exemptions claimed on your tax return.

To claim an exemption when you file your tax return, simply file Form 8965 with your Form 1040, Form 1040A, or Form 1040EZ. It is not necessary to call the IRS or to obtain the exemption in advance.

Payments for tax year 2018 and prior returns

Individuals who need to make a shared responsibility payment can calculate the payment using a work sheet included in the instructions for Form 8965 PDF. Taxpayers who do not have coverage and have an income below the filing requirement threshold for their filing status are exempt and should not make a payment. It is not necessary to file a return solely to claim this exemption.

See the Calculating and reporting the payment page for more information.

Premium Tax Credit

Tax year 2020: Requirement to repay excess advance payments of the Premium Tax Credit is suspended and certain unemployment compensation is excludible

The American Rescue Plan Act of 2021 (ARPA), enacted on March 11, 2021, suspended the requirement to repay excess advance payments of the premium tax credit (excess APTC) for tax year 2020.

If you already filed a 2020 return and reported excess APTC or made an excess APTC repayment, you don't need to file an amended return or take any other action. The IRS will reduce the excess APTC repayment amount to zero with no further action needed by the taxpayer. The IRS will reimburse people who have already repaid any excess APTC on their 2020 tax return. Taxpayers who received a letter about a missing Form 8962 should disregard the letter if they have excess APTC for 2020. The IRS will process tax returns without Form 8962 for tax year 2020 by reducing the excess APTC amount to zero.

If you have not filed your 2020 tax return, here's what to do:

If you have excess APTC for 2020, you are not required to report the excess APTC on your 2020 tax return or file Form 8962, Premium Tax Credit (PTC).
If you're claiming a net premium tax credit for 2020, you must file Form 8962, Premium Tax Credit (PTC).

For details see the Tax Year 2020 Premium Tax Credit:

Individuals who purchase coverage through the Health Insurance Marketplace may be eligible for advance payments of the premium tax credit (APTC). The Marketplace uses information individuals provide about their projected income, address, and family composition for the year to estimate the amount of APTC. Individuals can forgo APTC or have all or some of the APTC for which they are eligible paid directly to their insurer to lower their monthly premiums. For tax years 2021 and 2022, the ARPA temporarily expanded eligibility for the premium tax credit by eliminating the rule that a taxpayer is not allowed a premium tax credit if his or her household income is above 400% of the federal poverty line.

For tax years other than 2020, individuals who chose to have APTC sent to their insurer must file a federal income tax return, even if otherwise not required to file, and complete Form 8962, Premium Tax Credit (PTC) PDF PDF to claim the premium tax credit and reconcile the APTC with the premium tax credit allowed. If the taxpayer’s APTC is less than the premium tax credit, the taxpayer will get the difference, called net premium tax credit, as a higher refund or lower tax due. If the APTC paid to their health care providers were more than the premium tax credit (excess APTC), the taxpayer must pay all or part of the excess APTC with their tax return, except that this requirement to repay excess APTC does not apply for tax year 2020. The completed Form 8962 must be filed with the federal income tax return, except for taxpayers with excess APTC for 2020 who are not required to file Form 8962. For years other than 2020, filing your return without Form 8962 will delay your refund and may affect future APTC.

Those who enrolled in coverage through the Marketplace but didn’t get the benefit of APTC may claim the premium tax credit when they file their return. Individuals can complete Form 8962 to find out if they are allowed the premium tax credit. For more information about the premium tax credit, see our Premium Tax Credit page or use the interactive tool, Am I eligible to claim the Premium Tax Credit?

Individuals who purchased coverage through the Health Insurance Marketplace should receive Form 1095-A, Health Insurance Marketplace Statement. This form provides information that is needed when completing Form 8962. Taxpayers with questions about the information on Form 1095-A, or about receiving Form 1095-A, should contact their Marketplace directly.

Some taxpayers may receive a corrected or voided Form 1095-A because the information on the initial form was incorrect or incomplete. For more information on what you need to do with a corrected or voided Form 1095-A, see Corrected, Incorrect or Voided Forms 1095-A. This information can help you assess whether you should file an amended tax return.

2020 unemployment compensation

Under ARPA, eligible taxpayers are allowed to exclude up to $10,200 of unemployment compensation received in 2020 on their 2020 Form 1040, 1040-SR, or 1040-NR. Beginning in July 2021, the IRS reviewed tax returns filed prior to the enactment of ARPA to identify tax returns on which both excludible unemployment compensation and excess APTC repayments were reported by the taxpayer. Taxpayers received letters from the IRS, generally within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment. For taxpayers who reported both excludible unemployment income and APTC, the adjustment should have covered both items even though the IRS’s communication to the taxpayer may have mentioned only unemployment compensation.

However, if, because of the excluded unemployment compensation, taxpayers are now eligible for deductions or credits not claimed on the original return, they should file a Form 1040-X, Amended U.S. Individual Income Tax Return for tax year 2020. See 2020 Unemployment Compensation Exclusion FAQs — Topic D: Amended Return (Form 1040-X) for more information.

2021 unemployment compensation

Under ARPA, if you, or your spouse (if filing a joint return), received, or were approved to receive, unemployment compensation for any week beginning during 2021, the amount of the taxpayer's household income is considered to be no greater than 133% of the federal poverty line for the taxpayer's family size and the taxpayer is considered to have met the household income requirements for being allowed a premium tax credit.

Check the box on line A, above Part I of 2021 Form 8962, if you, or your spouse (if filing a joint return), received, or were approved to receive, unemployment compensation for any week beginning during 2021. By checking this box, you are certifying that you, or your spouse (if filing a joint return), received, or were approved to receive, unemployment compensation for any week beginning during 2021. For more information, see Pub. 974. Keep any supporting documentation related to the receipt of or approval to receive unemployment compensation with your tax return records.

Free File and e-file help simplify tax time

E-filing a tax return is the simplest way to file a complete and accurate tax return as it guides individuals through the process and does all the math for them.

Electronic Filing options include: