What is a 1095-A form and why do I need this for my taxes

If you signed up for Marketplace health insurance for the first time, you might be wondering what the 1095-A form is and why you need it. This document is essential for completing your tax return, especially if it’s your first time filing taxes. At Utah Avenue Insurance, we’re here to simplify the process for you. Let’s walk through everything step by step.

What Is a 1095-A?

The 1095-A is a tax form you’ll receive if you enrolled in health insurance through the Marketplace (also known as Healthcare.gov). This form typically arrives by mail at the end of January. If you don’t receive it, don’t worry—your Utah Avenue agent can email you a copy so you don’t miss a beat.

This form includes important details such as:

• Monthly Premiums: The total cost of your health insurance each month.

• Premium Tax Credit Received: The financial assistance (subsidies) that was applied to lower your monthly payments.

• Coverage Details: Who in your household was covered by the insurance and for how many months.

Why Do You Need the 1095-A?

The 1095-A is crucial because it helps reconcile the subsidies you received with the IRS. When you signed up for insurance, the subsidies that reduced your monthly payments were based on your estimated income for the year. Now that it’s tax season, the IRS needs to verify if your actual income matches your estimate. If there’s a difference, your subsidies need to be adjusted.

Filing Your Taxes with the 1095-A

When you prepare your tax return (or work with a CPA), the 1095-A is used to complete IRS Form 8962. This calculation determines:

1. If you received the correct amount of subsidies.

2. If you need to pay back some of the subsidies (if you underestimated your income).

3. If you qualify for an additional refund (if you overestimated your income).

Failing to include the 1095-A can delay your refund or cause issues with the IRS. It’s important to get this right from the start!

What Are Premium Tax Credits (Subsidies)?

Subsidies are financial assistance provided by the government to make health insurance more affordable. These credits reduce your monthly payments and are calculated based on your estimated income and household size. The goal is to ensure you’re not spending more than a certain percentage of your income on health insurance.

Why Do We Estimate Income?

When you applied for health insurance, you were asked to estimate your annual income for the current year. This estimate determined how much subsidy you were eligible for. However, if it’s your first time estimating income or if your work situation changes (for example, you get a raise, switch jobs, or work hourly), your actual income might differ by the end of the year.

Here’s what can happen during reconciliation:

• Underestimated Income: If you earned more than you estimated, you might need to pay back some of the subsidies you received.

• Overestimated Income: If you earned less, you might receive an additional refund on your taxes.

How Utah Avenue Insurance Can Help

We know filing taxes can be overwhelming, especially if it’s your first time. We’re here to help every step of the way. Your Utah Avenue Insurance agent can:

• Email Your 1095-A Form: So you have quick and easy access to this critical document.

• Explain Subsidy Reconciliation: We’ll help you understand how your estimated income impacts your taxes and how to avoid surprises.

• Provide Year-Round Support: If you need to update your income or have questions, we’re here for you.

Don’t Wait—File Early

Having your 1095-A ready means you can file your taxes early and avoid delays in getting your refund. If you need help accessing your form or understanding the details, contact your Utah Avenue agent today. We’re here to make sure you get the most out of your Marketplace health insurance and file with confidence!

At Utah Avenue Insurance, we’re proud to help people like you navigate health insurance and tax season without stress. Let us know how we can help you today!