A Webinar Presentation for the January 27, 2016
To access slides of today’s webinar: www.economicprogressri.org/rihealthcoverageproject To ask questions: click on Asks Questions section of webinar. If not working, email: Rachel Flum rflum@economicprogressri.org 2
2015 Tax Season: 5 Key Topics in Today’s Session Everyone who is eligible must have health insurance for 2015 1) 1) Vast majority of tax filers will simply “check the box” on their return Know the ABCs of 1095 Forms 2) Type of Health Coverage Federal Tax Form Individual/Family coverage purchased through HSRI (or Form 1095-A other exchange/marketplace) Medicaid, Medicare or through your job if you work for a Form 1095-B small employer (including SHOP coverage thru HSRI): and individual/family coverage purchased directly from a carrier Through your job if you work for a Large Employer Form 1095-C (Generally 50 +) 3
2015 Tax Season: 5 Key Topics in Today’s Session…continued No coverage? 3) Penalty applies (unless customer qualifies for an exemption) Exemptions 4) Qualifying reasons and how to get an exemption Advance Premium Tax Credit (APTC) 5) APTC is reconciled at tax time 4
Everyone Must Have Health Insurance Called “Individual Shared Responsibility” provision – Sometimes referred to as the Individual Mandate Applies to all children and adults For vast majority of tax filers, very simple process – If taxpayer and dependents had minimum essential coverage for each month of 2015, taxpayer simply checks a box on their federal return – No form needed – No further action required 5
Minimum Essential Coverage Examples of Minimum Essential Coverage – Most government-sponsored programs like: • Medicaid • CHIP • Medicare Part A • Medicare Advantage • Most TRICARE programs – Employer sponsored group coverage (including COBRA and retiree coverage) – Individual market coverage (qualified health plans) • Purchased through HSRI • Purchased directly from carriers 6
Tax Form 1095 – Shows MEC for 2015 Last Year: Only people who purchased commercial coverage through HSRI received 1095-A This year: – 1095-A: Purchased individual/family coverage through HSRI – 1095-B: Covered by Medicaid, Medicare, small employer (including SHOP) or individual/family coverage direct from a carrier – 1095-C: Covered by large employer (50+) Just because someone receives 1095 doesn’t mean person needs to file tax return – depends on filing rules Must file a tax return if received tax credits to buy HSRI coverage May receive more than one form: Parents purchased commercial coverage through HSRI and child/ren in RIte Care; or parent purchased thru an employer and child/ren in RIte Care; several possibilities for 2015 7
1095-A Health Source RI – What to Know HSRI sent “Watch the Mail” notice on January 15 Will send 1095-A between January 25 and February 1 1095-A shows months of coverage, premium and premium tax credit Use 1095-A to complete Form 8962 which is filed with tax return More about 1095-A later in presentation 8
1095-B Medicaid - What to Know Mailed in batches beginning January 8 – mid-February (over 200,000) – Cover letter – “Communication Notice” ( HealthSource RI letterhead) – 1095-B – FAQ If other health coverage and Medicaid is “wrap” will not receive Medicaid 1095-B – RIte Share (employer coverage) – Medicare and Medicaid (1095-B from Medicare) 9
1095-B Medicaid - What to Do Check for accuracy – especially months of coverage If information correct – That’s it! – Keep for records; do not need to file with tax return – Can check the box on tax return – coverage for 12 months If errors: Call 855-855-6128 – If there is an error, IRS will be notified about the correction and the person will receive a corrected Form 1095-B (done by DHS/Medicaid) – Important: Taxpayer does NOT need to wait for either the original or a corrected Form 1095-B to file if you “…can rely on other information you have about your coverage to complete line 61.” (Source: instructions on page 52 of 2015 Form 1040 – Line 61) 10
Cover Letter for Form 1095-B Communication Notice Dear Johnson Jordon: Here is your form 1095-B for 2015. This is a federal tax form that shows the months that you, or members of your family, had health coverage through Medicaid during the year. This form will help you show that you have met the federal requirement to have health coverage. If you or members of your family had other sources of health coverage in 2015, you may receive other 1095 forms. Please see the attached list of frequently asked questions for more information. The information on this form has been sent to the IRS. You do not need to attach it to your federal tax return, but you should keep it for your records. Please review the form carefully. If you think any of the information on this form is wrong, please call the Department of Human Services at 855-855-6128. You can find out more by visiting the EOHHS website (www.eohhs.ri.gov ) and clicking on “Form 1095 - B”, or by visiting the IRS website (IRS.gov/aca). Thank you, HSRI Team Note that this information comes from the Medicaid database and that any corrections necessary will be made by DHS/Medicaid staff 11
Part III will be filled out for Medicaid Enrollees (“State of Rhode Island”) 12
Most Taxpayers Will Simply Check the Box on Form 1040 Line 61 on From 1040 – Many will just the box 13
Penalties If No Coverage in 2015 Shared Responsibility Payment (sometimes referred to as the ‘penalty’): – Greater of 2% of household income above the tax return threshold for the taxpayer’s filing status*, OR – Flat dollar amount of $325 per adult and $162.50 per child (under age 18), limited to a family maximum of $975 Computed on monthly basis (i.e., taxpayer owes 1/12 th of annual amount for each month with no coverage or exemption) Penalty capped at national average premium for a bronze level QHP If covered for at least one day in the month, law gives credit for full month Short coverage gap allowed under Exemptions (gap of less than 3 consecutive months): – Example: You had coverage from 1/1/15-10/31/15 but not for Nov and Dec. You may use Form 8965 to apply for the short term coverage gap (Use code B for the exemption type in Part III of the form) * About $10,000 for an individual 14
Penalties If No Coverage in 2016 Payment/penalty increase in 2016 Shared Responsibility Payment: – Greater of 2.5% of household income above the tax return threshold for the taxpayer’s filing status, OR – Flat dollar amount of $695 per adult and $347.50 per child (under age 18), limited to a family maximum of $ 2,085 Importance of understanding 2016 penalty now: – Open enrollment for 2016 ends 1/31/16 – We need to educate people without coverage today about the 2016 penalty – If current enrollees are thinking of cancelling coverage, remind them of 2016 penalties After 2016, penalty amounts are based on 2016 amounts adjusted for inflation 15
Exemptions from the penalty What exemptions are available? How do I apply for an exemption?
What Exemptions are Available? Insurance is unaffordable: The lowest-priced coverage available to you would cost more than 8.05% of your household income You don’t have to file a tax return because your income is too low You’re uninsured for less than 3 months of the year You qualify for a hardship exemption You’re a member of the Narragansett Tribe (or other federally recognized tribe) or eligible for services through an Indian Health Services provider You’re a member of a recognized health care sharing ministry You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare You’re incarcerated (either detained or jailed), and not being held pending disposition of charges You’re not lawfully present in the U.S. 17
Coverage is Unaffordable It would cost more than 8.05% of your income in 2015 to buy: – Coverage from your employer or – A bronze plan through HSRI Example: Your household income in 2015 was $15,000.00. The cost of your employer-sponsored coverage was $1,500.00. The lowest-cost Bronze plan available to you was $1,300.00. Because both options exceed 8.05% of your household income ($1,207.50), you are eligible for an exemption from the penalty.
Coverage is Unaffordable Process: • If you are applying for an exemption because coverage was unaffordable in 2015, you must apply thru the tax return; you can only apply for this exemption through HSRI if you did so by the last date coverage was available in 2015 • You can apply for an exemption through HSRI if you think 2016 coverage is unaffordable; this is because exchanges (HSRI) use projected income vs actual income 19
Income Below Threshold Your income is below the the tax filing threshold. You do not need to do anything to get this exemption. You may still want to file a tax return to get the Earned Income Tax Credit. You must file a tax return if you received tax credits to help you pay for insurance through HSRI See the chart below
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