FORM 1095-A: PPACA Tax Rules Get Real

Large employers can choose whether to send their workers Form 1095-C coverage information notices for the 2014 plan year.

Health insurers and sponsors of self-insured plans can choose whether to send enrollees Form 1095-B coverage information notices for the 2014 plan year.

Patient Protection and Affordable Care Act (PPACA) public exchanges have to send out Form 1095-A Health Insurance Marketplace Statement notice to exchange qualified health plan (QHP) notices for the 2014 plan year – by Jan. 31, 2015.

Consumers who are getting QHP tax credits need the notices to see whether they got the right amount of tax credit money in 2014, whether the IRS owes them money, or whether they have to come up with cash to return some of the excess tax credit money that was paid to their health insurers.

When the Internal Revenue Service (IRS) was putting the 1095-A form through a paperwork review process, analysts estimated the exchanges would have to mail about 2 million of the forms.

While public exchange program managers have been out front talking about efforts to market the QHPs, behind the scenes, they have been working on efforts to mail the 1095-A’s.

The 1095-A effort could be a new test of the exchange program’s capabilities.

For a look at what policy analysts and state exchange managers are saying about the 1095-A effort, read on.

1. Even groups that love PPACA shake their heads at how complicated the 1095-A effort seems to be.

The drafts of the PPACA forms have received an unusual amount of intention, in part because they are supposed to go to low-income and moderate-income people who may be unfamiliar with commercial health insurance, but the early drafts were difficult even for experienced tax specialists to understand.

Elizabeth G. Taylor, the executive director of the National Health Law Program, wrote to the IRS in November to suggest that 1095-A and its sister forms need streamlining, and to make more of an effort to have the information flow into consumers’ online tax forms automatically.

This year, for example, consumers who get 1095-As, but not 1095-Bs or 1095-Cs, may have no idea how to document coverage they obtained outside the public exchange system, Taylor writes.

2. The state-based exchanges that post board meeting documents say in the documents that they have been working hard on the 1095-A effort.

Managers of Covered California, for example, say they are developing interactive voice response messages about the form for their phone line, talking points for their sales force, and guides for their website. The exchange held a PPACA tax event today to raise awareness.

Managers of MNsure, Minnesota’s state-based exchange, said they will be sending postcards about the notices and e-mails, and working with partner organizations to reach consumers. They said they’d provide a full presentation on the 1095-A effort in February.

The New York State of Health exchange held a webinar for exchange helpers in early January.

3. Accountants and tax preparers are racing to bone up on 1095-A English.

The tax specialists and others who are trying to help consumers use the 1095-A to fill out their Form 8962 are having to learn everything from what a Form 8962 is (the form consumers use to reconcile the amount of PPACA tax credits they got with the amount the IRS thinks they were supposed to get) to what exactly a “Coverage Household” is.