Obamacare Program Update for Plan Year 2026 – Change is Coming!

 

Background

The Obamacare health care reform law, formally known as the Affordable Care Act (ACA), was created in 2010 by the federal government to extend health insurance coverage and reduce the financial burden of medical expenses for millions of uninsured adults. ACA plans were first issued effective January 1, 2014; and the enrollment process that started the prior October through the Health Insurance Marketplace was chaotic that first year, if it worked at all.

Obamacare expanded Medicaid services, created federal and state Marketplaces (currently about 20 states operate their own state-based enrollment platforms), prevented denial of medical coverage due to pre-existing conditions, and required plans to cover 10 Essential Health Benefits (EHBs) with a cap on maximum out-of-pocket expenses. Two types of federal subsidies were introduced based on projected household income and size: the Advance Premium Tax Credit (APTC), or monthly premium subsidy, and Cost Sharing Reductions (CSRs), which make plans more affordable by lowering the amount eligible enrollees must pay for deductibles and other out-of-pocket costs. CSRs apply only to applicants up to 250% of the Federal Poverty Level (FPL) enrolling into a Silver-level ACA plan.

Initially, the ACA faced legal challenges, and the program’s popularity was divided along political party lines. The ACA prevailed at the U.S. Supreme Court, which struck down the argument that the ACA was unconstitutional. However, Medicaid expansion was left up to the states.

Perhaps the most unpopular aspect of the ACA was a tax ‘penalty’ imposed on anyone without an exemption from the mandate to be covered by a health care plan (an ACA plan, commercial group health, Medicare, or other qualifying coverage). In late 2017, President Trump signed a tax bill zeroing out the tax penalty for coverage issued in 2018 and thereafter.

With the ACA tax penalty gone, Obamacare gained popularity across both political parties, despite some national insurers exiting (but later re-entering) sales of ACA plans. Democrats remained the main proponents, and then on March 11, 2021, Obamacare was given a major overhaul when President Biden signed the sweeping “American Rescue Plan Act” into law.

The American Rescue Plan created temporary enhanced subsidies that later were extended through the end of 2025 by the Inflation Reduction Act (signed by President Biden in 2022). Higher-income people over 400% FPL could receive a subsidy for the first time; plus, the subsidy amount was increased for lower-income people already eligible. Further, maximal subsidies were given to those who received unemployment benefits (for 2021), and the law forgave individuals from having to repay excess ACA premium subsidies at tax time (for 2020). Finally, subsidized COBRA coverage was made available for laid-off workers (from April to September of 2021), and the 14 states that had not yet expanded Medicaid were given new financial incentives to do so.

Higher income individuals and families went from being ineligible for any federal premium subsidy to potentially qualifying for substantially reduced premium (possibly half, or even less, of the total plan premium). The applicable threshold is if benchmark premiums exceed 8.5% of household income.

Under the American Rescue Plan, individuals and families under 400% FPL (already eligible for PTCs) gained access to higher subsidies. Notably, those with incomes between 100%-150% of the Federal Poverty Level could qualify for zero-premium coverage when electing a Silver-level benchmark plan (under prior law, they had to contribute premium up to approximately 2% of income).

ACA Provisions Set to Sunset on 12/31/2025

The enhanced premium subsidies detailed above are set to expire on 12/31/2025; and without an unforeseen extension, subsidized ACA coverage is about to become a lot more expensive. As noted, individuals and families projecting over 400% FPL will lose subsidy eligibility entirely.

A recent report published by the Center on Budget and Policy Priorities estimated that a family of four making $85,000 would pay an additional $313 in monthly premiums for coverage in 2026, as well as face a $900 increase in their cap on total out-of-pocket medical expenses.

For reference, the 2025 Federal Poverty Level guidelines (applicable for 2026 ACA plans) are shown below (figures are for the 48 contiguous states).

2025 FPL:

Family Size of 1: $15,650

Family Size of 2: $21,150

Family Size of 3: $26,650

Family Size of 4: $32,150

For example, a family of four projecting $140,000 total annual household income in 2026 is at the 435% FPL level, rendering them ineligible for any premium subsidy next year. Currently, if this family were enrolled in my home zip code, they would be eligible for a monthly premium subsidy of $554 ($6,648 for the full calendar year). So, absent any change in the current landscape, this family is facing an increase of more than $6,600 in total 2026 premiums – not including premium rate increases due to yearly inflation that are extremely likely to be implemented.

ACA Program “Pause” of Year-Round Enrollment SEP

In 2021, the U.S. Department of Health and Human Services (HHS) finalized a new special enrollment period (SEP) in states that use HealthCare.gov (optional for states that operate a state-based exchange), granting Year-Round enrollment in ACA plans for household income up to 150% FPL. That Year-Round enrollment provision was extended through 2025 under the 2022 Inflation Reduction Act and became permanent under a rule change HHS made in 2024.

Under this SEP, eligible applicants can enroll in an ACA plan through the Marketplace at any time during the year. Coverage takes effect on the first of the following month (this is true even in state-run exchanges as of 2025; prior to 2025, state-run exchanges could set mid-month enrollment deadlines for coverage to take effect the first of the following month).

In states that have expanded Medicaid, due to the very narrow range between 138% of the current year’s FPL (for Medicaid eligibility) and 150% of the prior year’s FPL, a small segment of the population is helped by this year-round enrollment SEP. In states not expanding Medicaid, more people are impacted (those qualifying for a federal subsidy and within 100%-150% FPL).

So, is this special Year-Round enrollment period truly permanent? No, of course not!

The Trump administration’s “Marketplace Integrity and Affordability” rule (effective August 25, 2025, for some provisions, and for other provisions, Plan Year 2026 or Plan Year 2027) has paused the Year-Round SEP for ACA enrollees at or below 150% FPL. HHS clarified the low-income SEP will once again be available, at the option of each exchange, for Plan Year 2027.

The rationale for this HHS rule is that the low-income SEP played a significant role in allowing fraudulent enrollments, and that it is potentially resulting in adverse selection, with people waiting until they need medical services to enroll in coverage.

Other ACA Program Changes

A host of other changes are approaching:

Deferred Action for Childhood Arrivals (DACA) recipients lose eligibility for coverage because of the Marketplace Integrity and Affordability rule. HHS estimates that 10,000 DACA recipients will lose Marketplace coverage, and 1,000 people will lose Basic Health Program (BHP) coverage. While DACA recipients became eligible for Marketplace coverage in November 2024, access to enroll in Marketplace plans was soon revoked in 19 states that sued to prevent DACA recipients from enrolling (DACA recipients in the rest of the country have continued to be eligible, but that will end in August 2025).

While the Marketplace currently requires income verification for some applications with income mismatches or missing IRS data, we should expect all Marketplace applicants to be required to provide proof of household income when attesting to household income that does not match information the exchange gets from its trusted data sources (such as the applicant's most recent year’s tax return).

The final rule also permanently removes the current automatic 60-day extension to the regular 90-day window that applicants are given to provide requested income documentation.

Like the low-income SEP rule change, the income verification change is temporary and applies only through the end of 2026.

Another change is directed towards ACA enrollees who take advantage of grace period provisions and, for example, look for ways to ‘skip’ a premium payment. Under the new rules, ACA plan enrollees who owe past-due premium to an insurer and apply for a new policy with that insurer must pay the past-due premium to effectuate the new policy (unless contrary to state laws and regulations). If the applicant does not remit the past-due premium, the insurer will be allowed to refuse to effectuate the new policy.

A technical change has been made, impacting maximum out-of-pocket limits. Starting in 2026, the new rule finalizes a methodology change for how maximum out-of-pocket limits are calculated, and the result is that the highest allowable out-of-pocket limit for a single individual will be $10,600 in 2026. Under the previous methodology, the Biden administration had finalized a 2026 maximum out-of-pocket limit of $10,150, but that has now been replaced.

The impact on ACA plan enrollees will be higher out-of-pocket costs and less generous premium subsidies. Since the IRS uses the same premium indexing methodology to determine the percentage of income that Marketplace enrollees pay in after-subsidy premiums, the new methodology will also have the effect of reducing premium subsidies (this is because it will increase the percentage of income that people pay in after-subsidy premiums).

A new administrative rule will impact enrollees in $0 (after-subsidy) premium plans who let their plans auto-renew in 2026. Auto-renewal of ACA plans is widely used, as evidenced by the enrollment period for 2025 coverage, in which more than half of the approximately 20 million people who renewed Marketplace coverage utilized auto-renewal. 

Under the new rules, if ACA enrollees with a 2025 $0 premium plan rely on auto-renewal for their 2026 coverage, they cannot be approved for $0 premium coverage until they reconfirm basic eligibility information in their Health Insurance Marketplace account. Until doing so, these enrollees will incur a minimum of $5 premium due each month.

Like some of the rules noted above, the auto-renewal change is temporary and applies only for the 2026 Plan Year (and it does not apply to state-run exchanges).

But wait, that’s not all! The budget bill enacted on July 4, 2025 (known as the One Big Beautiful Bill Act) calls for Marketplace auto-renewal to end altogether, starting with the 2028 Plan Year. Marketplace enrollees will have to verify their ongoing eligibility for coverage to ensure receipt of premium subsidies each year (Marketplaces will have the option to rely on automatic verification protocols for confirming information, when available from trusted data sources).

The final rule permanently removes “Bronze-to-Silver” auto-renewal, a protocol that Healthcare.gov adopted in 2024, allowing the Marketplace to switch a consumer from a Bronze plan to a Silver plan in some circumstances. Under this process, if an applicant is eligible for CSRs, enrolled in a Bronze plan, and a Silver plan is available in the same product category with the same provider network, and with equal or lesser after-subsidy premiums, the exchange can auto-renew the enrollee into the Silver plan (allowing the enrollee to take advantage of CSRs).

The final rule prohibits this protocol, starting with the 2026 Plan Year. Instead, the auto-renewal will keep the enrollee in their existing plan if it continues to be available. State-run exchanges can retain flexibility regarding their re-enrollment protocols, but only at the discretion of HHS.

Pre-enrollment SEP eligibility verification will be stricter for the 2026 Plan Year. In recent years, HealthCare.gov applicants enrolling under a SEP have only been required to provide proof of their SEP eligibility if the qualifying life event was the loss of other qualifying coverage. The final rule removes that limitation, allowing pre-enrollment verification for any qualifying life event.

The exchange will be required to conduct pre-enrollment SEP eligibility verification for at least 75% of new SEP enrollments. Originally, the proposed rule called for this to apply nationwide, but it was only finalized for states that use HealthCare.gov (state-run exchanges will continue to have the option to verify applicants’ SEP eligibility or not).

A shorter open enrollment period is on the way, but not until Plan Year 2027. HHS had initially proposed a shorter open enrollment period starting in the fall of 2025, but the final rule pushes this out until the fall of 2026. So, the open enrollment period for Plan Year 2026 is slated to begin on November 1, 2025, and continue through January 15, 2026, in most states. State-run exchanges will have the option to extend it even later than that, which several have historically done.

But starting in the fall of 2026, and for future years, open enrollment will be shorter:

In states that using healthcare.gov, it will run from November 1 to December 15.

State-run exchanges will have the option to extend open enrollment, but only within certain parameters:

• It must begin no later than November 1
• It can’t continue past December 31
• It can’t last longer than nine weeks.
• All policies selected during open enrollment will take effect January 1

The open enrollment period will continue to apply both “on-exchange” and “off-exchange” (ACA-compliant health insurance, without availability of federal subsidies, sold outside of the Marketplaces). 

Already this year, at least one large national insurer has decided to fold its hand and exit the Health Insurance Marketplaces for Plan Year 2026. CVS Health, owner of Aetna, recently announced that Aetna will withdraw all ACA individual and family plans at the end of 2025 (Aetna has cited persistent underperformance in its ACA exchange business, including substantial financial losses).

This isn’t Aetna’s first time pulling back from sales of ACA plans. After exiting in 2018 and coming back in 2022, the company is shifting gears once again. While it’s not possible to know for sure, it would seem Aetna is keenly interested in its profit margin, more so than serving the American public.

As an editorial comment, people who earn too much to receive federal subsidies have seen individual market health insurance premiums rise steeply, in some cases ten-fold, compared to a dozen years ago. That’s in addition to the continuing trend of higher deductibles, out-of-pocket caps, etc. Proponents of Obamacare tout the value of APTCs, CSRs, coverage of pre-existing conditions, children allowed on their parents’ plan until age 26, and other components of the program, which clearly have helped many people… but at what overall cost?  Administrative and regulatory burdens under Obamacare are enormous, and arguably those expenses would be much better directed toward actual medical care.

To conclude, I shall share a remark posted last month on a popular financial website by a commenter who is unknown to me, but apparently has more common sense than many of our government leaders: 

The Bronze Plan is complete rubbish. 60/40, high deductible, covers nothing really, unless you are hit by a bus. Let's put Congress on the Bronze Plan. They have a Mercedes Benz Plan right now. Time for them to feel the pain of the average citizen. That should cut some 'government waste.' 

Until next time,

 

Andrew Herman, President

AH Insurance Services, Inc.

 

 

 

 

 

 

Affordability of Employer Coverage for Family Members of Employees

Earlier this week, the Internal Revenue Service released a final rule changing the way health insurance affordability is determined for members of an employee’s family under Affordable Care Act (ACA) regulations.

As discussed in the prior post, need-based calculations to determine eligibility for the federal ACA program and its subsidies consider only the employee, ignoring the spouse and children.  In many cases, an employer pays all or a portion of the employee's premium but nothing towards other members of the household.  In this case, ACA calculations determine that subsidized insurance is not available since the employer's health insurance is deemed "affordable" for the employee; but in fact, the family premium is prohibitively expensive and would be deemed unaffordable if the ACA need-based calculations included family members.

Under the new rules that begin in 2023, if a consumer has an offer of employer-sponsored coverage that extends to the employee’s family, the affordability of that offer of coverage for the family members will be based on the family premium amount, not the amount the employee must pay for self-only coverage.

This is a long-awaited solution to the "family glitch", which has been an issue since the ACA program's inception.  The change will be reflected in the online application through the HealthCare.gov enrollment platform and Enhanced Direct Enrollment certified partner applications during this year’s Open enrollment period that starts on November 1, 2022.  State-based Marketplaces not using the HealthCare.gov enrollment platform are also working to implement this change, but may have different implementation timelines. 

To view the final rule, please visit:

"https://www.federalregister.gov/documents/2022/10/13/2022-22184/affordability-of-employer-coverage-for-family-members-of-employees"

A Proposed Solution for the Affordable Care Act (ACA) Family Glitch

In April, the Biden administration proposed a solution to the ACA's "family glitch", a technical issue that has impacted family health premium subsidies since the program's inception.

Currently, people who are without access to "affordable" health insurance through a job may qualify for a premium tax credit to be applied towards a plan on the ACA’s health insurance marketplaces.  However, regulations that determine if employer-based insurance is affordable give consideration only to the employee, without any need-based calculations allowed for spouse or children.  

In the current situation, family members of the employee may have access to coverage through the employer, but the cost is often prohibitively expensive and out of reach for the household budget.  The so-called "family glitch" affects about five million people and has made it impossible for many families to use the premium tax credit to purchase an affordable ACA marketplace plan.

Should the proposed rule be finalized, family members of workers with affordable self-only coverage but unaffordable family coverage may qualify for premium tax credits to buy an ACA plan, according to a statement from the White House.  The proposed rule would extend marketplace tax credits to only the family members of workers who are not offered affordable job-based family coverage.

"Most people thought it would be up to Congress to remedy the family glitch.  But since getting modifications through Congress has proved nearly impossible, advocates have pushed for executive action,” said Julie Rovner of Kaiser Health News. “That is not as foolproof as passing a law and is subject to a challenge through lawsuits."

It is not uncommon where employee-only coverage is affordable but family coverage is not.  Most employers offer family coverage, but many do not subsidize the cost for family members of the employee.  The Kaiser Family Foundation’s 2021 Employer Health Benefits Survey shows premiums and employee contributions have increased significantly.  In 2021, average premiums for employee-only coverage were $7,739, compared to $22,221 for family coverage.  That's nearly $2,000/month!

The IRS will hold a hearing on the proposed rule on June 27.  Assuming the rule is finalized as proposed, the family glitch would no longer exist, and dependents offered unaffordable job-based family coverage could be eligible for more affordable marketplace coverage beginning in 2023.

Click here for the Fact Sheet distributed by the Biden Administration.

Until next time,

Andrew Herman

U.S. Supreme Court Upholds Affordable Care Act in 7-2 Ruling

Once again, the nation's highest court has upheld the Affordable Care Act (ACA) in a 7-2 ruling dismissing a challenge made to the ACA in the suit Texas v. United States.  That suit, which had the potential to invalidate the entire law, was turned away by today's majority ruling in California v. Texas.  This marks the third time the U.S. Supreme Court has ruled in favor of the ACA.

Today's ruling found that the plaintiffs did not have a legal right to bring the case before the Court.  The opinion held that plaintiffs in the challenge “failed to show a concrete, particularized injury fairly traceable to the defendants’ conduct in enforcing the specific statutory provision they attack as unconstitutional.”  The opinion did not speak to the underlying issue of the mandate’s constitutionality.

Justice Stephen Breyer delivered the court’s opinion, with Justices Samuel Alito and Neil Gorsuch dissenting.  Writing for the court, Justice Stephen Breyer said the states and people who filed the latest suit lacked legal standing to go to court.  Breyer said they could not show they were injured by the now-toothless mandate, as required under the Constitution.

The prior mandate, arguably the most controversial aspect of the ACA law, was a federally imposed tax penalty for not being enrolled in health insurance.  It was eliminated in 2019 by actions taken under the Trump Administration.  The penalty amount for not having health insurance in 2018 was $695 for adults and $347.50 for children, or 2% of yearly income, whichever amount is more.

Breyer noted, “To find standing here to attack an unenforceable statutory provision would allow a federal court to issue what would amount to an advisory opinion without the possibility of any judicial relief."

Justices Samuel Alito and Neil Gorsuch dissented, indicating they would have let the suit go forward and continue to support dismantling most of the ACA.

In his dissent, Alito wrote “No one can fail to be impressed by the lengths to which this court has been willing to go to defend the ACA against all threats."  Alito was in dissent in both previous ACA cases.

In a concurring opinion, Justice Clarence Thomas said he agreed with Alito’s analysis of the previous cases, but agreed with the majority that the latest challengers lacked the right to sue. “Although this court has erred twice before in cases involving the Affordable Care Act, it does not err today,” Thomas wrote.

Today’s ruling leaves the entire ACA intact.  The case is California v. Texas, 19-840.

Until next time,

Andrew Herman

U.S. District Court Rules ACA Unconstitutional

A federal judge for the U.S. District Court for the Northern District of Texas has ruled in favor of a lawsuit filed by his state and 19 others which claimed that Congress’ recent repeal of the ACA’s tax penalty has undone the rationale of the Supreme Court’s 2012 decision that the law is constitutional.

U.S. District Court Judge Reed O'Connor issued a decision on December 14 in Texas v. Azar declaring the individual mandate for health insurance coverage unconstitutional and ruling further that the mandate cannot be severed from the rest of the ACA, rendering the entire law invalid.

The original lawsuit by the states was filed against the U.S. Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS).  Its claim against the ACA’s constitutionality rests upon the U.S. Supreme Court ruling that the individual mandate was constitutional under the powers of taxation held by Congress; however, elimination of the individual mandate’s enforcement mechanism in last year's Tax Cuts and Jobs Act did not actually eliminate the mandate.  Rather, it simply dropped the tax penalty for not having qualifying health insurance to $0 beginning in 2019.

Therefore, the lawsuit argued that the individual mandate has been retained and rendered unconstitutional, as it no longer exercises Congress’ powers of taxation.  Judge O'Connor agreed with the lawsuit’s plaintiffs and issued partial summary judgement in their favor; although he did not order an injunction against the ACA as requested in the lawsuit.

Following the December 14 ruling, HHS stated it “will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision.”  The ruling is expected to be appealed by various state attorneys general and possibly will end up back at the Supreme Court.

The Affordable Care Act (ACA) – What Would a Replacement Program Look Like – And Is One Needed?

Georgia Congressman Tom Price, a fierce critic of the ACA and a leading advocate of repealing and replacing the controversial 2010 health care law, recently was chosen by President-elect Donald Trump to lead the Department of Health and Human Services (HHS).  On track to be behind the wheel at HHS, Price may be the one who authors final rules implementing whatever legislation ultimately replaces the ACA (known informally as “ObamaCare”).

Congressman Price, a former orthopedic surgeon, personally introduced legislation to repeal and replace ObamaCare in the current Congress and previous sessions.  His 2015 proposal is called the Empowering Patients First Act and served as the basis for a subsequent health care proposal unveiled in June of this year by House Speaker Paul Ryan.

A key feature of ObamaCare is that it spreads out the costs of health insurance across generations, with subsidization of older sicker people who use more health care by healthier young people.  Prior to the ACA’s implementation, most states permitted an age band rating with a 5:1 ratio; meaning that insurers could charge insureds at the highest issue ages up to five times what the youngest insureds pay in premium.  The ACA compressed the permitted age band rating to a 3:1 ratio, forcing companies to subsidize older people with higher premium levels for younger people.  Price’s proposal would eliminate that, which might be viewed favorably even by ObamaCare's proponents who now recognize they are fighting an uphill battle trying to convince young adults to buy coverage at an exorbitant premium cost.

Price has spoken out against the ACA’s approach to insert the government in the middle of the doctor-patient relationship.  In June of this year Price stated, “They believe the government ought to be in control of health care” and continued with "we believe that patients and doctors should be in control of health care.  People have coverage, but they don't have care."  More recently, he declared “ObamaCare is failing” in a November 1st op-ed on the Townhall website.

Some of the key points from Prices' health care proposal are as follows:

• Fixed tax credits for people to use to buy insurance on the private market, with credits starting at $900 a year below age 18 and rising with age.  People on Medicaid, Medicare, Tricare or the Veterans Affairs (VA) program could opt for tax credits to buy private insurance.

• Expansion of health savings accounts, which allow people to save money for health care costs on a pre-tax basis.  People covered by existing government programs including Medicare and the VA could contribute to their health savings accounts to pay for premiums and copayments.

• No denying coverage to people with pre-existing medical conditions provided they had maintained continuous insurance for 18 months prior to selecting a new policy.  Otherwise, for people who had not maintained such continuous insurance, coverage of a pre-existing condition could be excluded for up to 18 months after enrolling in a new health plan.

• Companies can take a tax deduction of up to $20,000 for a family health plan and $8,000 for an individual.  The limit is intended to discourage overly generous employer health insurance plans.

• States would receive federal funds to create “high-risk pools”, which are government-run health plans for people with pre-existing medical conditions who cannot find affordable health insurance on the private market. 

Effective implementation of Price’s plan seemingly would require an initial open enrollment period that achieves broad success in covering Americans not already insured under employer-sponsored programs or government health care plans such as Medicare and Tricare.  Following the initial program enrollment, Price’s plan would make it difficult for people to try to game the new system by purchasing insurance only upon discovery of an illness.

Price concluded his op-ed with the following:

“We solve the insurance challenges of portability and pre-existing conditions by applying the same coverage rules that already exist in the employer-sponsored market – real, sustainable protections that mean no one can be priced out of the health insurance market if they have a bad diagnosis or injury.  And, for those on a government health care program, we offer reforms that will empower states with the flexibility to best serve their Medicaid populations while offering Medicare beneficiaries more choices that will help save, strengthen, and secure this vital program in the years to come.”

Let us hope that Price’s words do not prove to ring hollow, like President Obama’s statement from March 2010 in his Weekly Address: Health Reform Will Benefit American Families and Businesses This Year:  “What won’t change when this bill is signed this:  if you like the insurance plan you have now, you can keep it.  If you like your doctor, you can keep your doctor.  Because nothing should get in the way of the relationship between a family and their doctor.”

For the record, as a licensed sales agent I have assisted dozens of Americans in obtaining insurance through the ACA’s Health Insurance Marketplace.  I have been authorized to conduct Marketplace business since the fall of 2013 when agents initially were certified.  Since that time, my existing individual policy was canceled, and the premium for the lowest cost (non-subsidized) ACA compliant plan for sale in my area is more than double what I had paid prior to 2014.  Further, my 2017 plan (I chose the lowest cost) does not include coverage for the orthopedic surgeon who successfully repaired a torn labrum for me more than a decade ago; nor does my plan include coverage for any physician I have visited in nearly 20 years living in Florida.  To add insult to injury, today I often work harder for an individual or family to assist with a health insurance plan enrollment; yet my compensation is less than a third of what I received for similar work performed prior to ObamaCare.  I do not believe that insurance company executives are making less money now, and I definitely do not recall hearing President Obama admit that his proclamation noted above turned out to be totally false.  It is disappointing to me that accountability only applies to regular people, and not to those at the highest positions in our country.

After having conducted a thorough examination of the issues, I would say that a program to replace ObamaCare indeed is needed.

Until next time,

Andrew Herman

Questions and Answers about Health Care Forms 1095-A, 1095-B, and 1095-C

This Post re-prints information from the IRS website published on January 11, 2016.  Here is a Link to the Source Page:

https://www.irs.gov/Affordable-Care-Act/Questions-and-Answers-about-Health-Care-Information-Forms-for-Individuals

We suggest you consult with a Tax Accountant to be sure that your 2015 health insurance premiums -- in particular any federal health insurance premium subsidies received -- are reported and reconciled as required on your 2015 tax return.

____________________________________________________________________________

Q&A:

1. Will I receive any new health care tax forms in 2016 to help me complete my tax return?

Starting early in 2016, you may receive one or more forms providing information about the health care coverage that you had or were offered during the previous year.  Much like Form W-2 and Form 1099, which include information about the income you received, these new health care forms provide information that you may need when you file your individual income tax return.  Also like Forms W-2 and 1099, these new forms will be provided to the IRS by the entity that provides the form to you.

The new forms are:

·        Form 1095-A, Health Insurance Marketplace Statement.  The Health Insurance Marketplace (Marketplace) sends this form to individuals who enrolled in coverage there, with information about the coverage, who was covered, and when.

·        Form 1095-B, Health Coverage.  Health insurance providers (for example, health insurance companies) send this form to individuals they cover, with information about who was covered and when.

·        Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.  Certain employers send this form to certain employees, with information about what coverage the employer offered. Employers that offer health coverage referred to as “self-insured coverage” send this form to individuals they cover, with information about who was covered and when.

2. When will I receive these health care tax forms?

The deadline for the Marketplace to provide Form 1095-A is February 1, 2016.  The deadline for insurers, other coverage providers and certain employers to provide Forms 1095-B and 1095-C has been extended to March 31, 2016.  Individual taxpayers will generally not be affected by this extension and should file their returns as they normally would.
 

3. Must I wait to file until I receive these forms?

If you are expecting to receive a Form 1095-A, you should wait to file your 2015 income tax return until you receive that form.  However, it is not necessary to wait for Forms 1095-B or 1095-C in order to file.

Some taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2015 tax return.  While the information on these forms may assist in preparing a return, they are not required.  Individual taxpayers will generally not be affected by this extension and should file their returns as they normally would.

Like last year, taxpayers can prepare and file their returns using other information about their health insurance.  You should not attach any of these forms to your tax return.

4. What are the health care tax forms that I might receive and how do I use them?

Health Care Form	Sent To	Sent By	What to do with this form
Form 1095-A, Health Insurance Marketplace Statement	Individuals who enrolled in health coverage for themselves or their family members through the Marketplace	Marketplace	This form provides information about your Marketplace coverage. Use Form 1095-A to complete Form 8962 and reconcile advance payments of the premium tax credit or claim the premium tax credit on your tax return. Use Form 1095-A for information on whether you and your family members had coverage that satisfies the individual shared responsibility provision. ·       If Form 1095-A shows coverage for you and everyone in your family for the entire year, check the full-year coverage box on your tax return. ·       If there are months when you or your family members did not have coverage, determine if you qualify for an exemption or must make an individual shared responsibility payment. Do not attach Form 1095-A to your tax return – keep it with your tax records.
Form 1095-B, Health Coverage	Individuals who had health coverage for themselves or their family members that is not reported on Form 1095-A or Form 1095-C.	Health Coverage Providers – ·       Insurance companies outside the Marketplace ·       Government agencies such as Medicare or CHIP ·       Employers who provide certain kinds of health coverage (sometimes referred to as “self-insured coverage”) but are not required to send Form 1095-C (see below). ·       Other coverage providers	This form provides information about your health coverage. Use Form 1095-B for information on whether you and your family members had health coverage that satisfies the individual shared responsibility provision. ·       If Form 1095-B shows coverage for you and everyone in your family for the entire year, check the full-year coverage box on your tax return. ·       If there are months when you or your family members did not have coverage, determine if you qualify for an exemption or must make an individual shared responsibility payment. Do not attach Form 1095-B to your tax return - keep it with your tax records.
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage	Certain employees of applicable large employers (See next column).	Applicable large employers– generally those with 50 or more full-time employees, including full-time equivalent employees	Form 1095-C provides information about the health coverage offered by your employer and, in some cases, about whether you enrolled in this coverage. Use Form 1095-C to help determine your eligibility for the premium tax credit. ·       If you enrolled in a health plan in the Marketplace, you may need the information in Part II of Form 1095-C to help determine your eligibility for the premium tax credit. ·       If you did not enroll in a health plan in the Marketplace, the information in Part II of your Form 1095-C is not relevant to you. Use Form 1095-C for information on whether you or any family members enrolled in certain kinds of coverage offered by your employer (sometimes referred to as “self-insured coverage”). ·       If Form 1095-C shows coverage for you and everyone in your family for the entire year, check the full-year coverage box on your tax return.  ·       If there are months when you or your family members did not have coverage, determine if you qualify for an exemption or must make an individual shared responsibility payment. Do not attach Form 1095-C to your tax return - keep it with your tax records.

5. How will I receive these forms?

The Marketplace, health coverage providers and applicable large employers will mail (or hand deliver) these forms to you or provide them electronically to you, if you have consented to electronic delivery.

6. My employer or health coverage provider has suggested that I opt to receive these forms electronically rather than on paper.  Are they allowed to ask me that? 

Yes. Employers and health coverage providers may ask for your consent to receive the forms electronically. This is entirely acceptable and may be more convenient for you. Electronic forms provide the same information that is provided in the paper forms.

7. Will I get at least one form?

Maybe.  If you were enrolled in health coverage for 2015, you should receive a Form 1095-A, 1095-B, or 1095-C.  In addition, if you were an employee of an employer that was an applicable large employer in 2015, you may receive a Form 1095-C.  If you don’t fall in either of these categories, you won’t receive a form.

8. Will I get more than one form?

Maybe.  You are likely to get more than one form if you had coverage from more than one coverage provider or if you worked for more than one employer that offered coverage. You are also likely to get more than one form if you changed coverage or employers during the year or if different members of your family received coverage from different coverage providers.

The following examples illustrate when you may get more than one Form 1095 and what to do with the information on those forms.

Example 1:  You are single with two dependent children.  At the beginning of 2015, you were unemployed, and you and your children were enrolled in coverage through the Marketplace.  You received the benefit of advance payments of the premium tax credit to help pay for your coverage.  In August of 2015, you started working 40 hours per week for an employer with 300 employees (an applicable large employer) that offered health insurance coverage to you and your children.  However, that offer of coverage was considered unaffordable to you for purposes of the premium tax credit, so you did not enroll in it and instead continued your Marketplace coverage with advance payments of the premium tax credit.  Early in 2016, you receive Form 1095-A (from the Marketplace) and Form 1095-C (from your employer).

When you complete Form 8962, Premium Tax Credit, you will use the information on Form 1095-A to reconcile advance payments of the premium tax credit and to verify that you had health coverage for the entire year.  You will use Form 1095-C to verify that your employer coverage was unaffordable for you.  You will not attach Form 1095-A or 1095-C to your return, but you should keep these forms with your tax records.

Example 2:  You are single with no dependents. At the beginning of 2015, you were employed by employer A, which has 20 employees (and therefore is not an applicable large employer).  You had coverage through A’s employer-sponsored plan, which is insurance that A purchases from health insurance issuer Q (i.e., not a “self-insured plan”).  In June of 2015, you changed jobs and started working 40 hours per week for employer B, which has 500 employees (and so is an applicable large employer).  You immediately began receiving coverage through that employer’s plan, which is insurance it purchases from insurance issuer R.  Early in 2016, both insurance companies will send you a Form 1095-B providing information about the coverage in which you were enrolled.  You also will receive a Form 1095-C from employer B, the applicable large employer, providing information about the health coverage B offered you.

You will use the information on Forms 1095-B to verify that you had health coverage for each month during the year and will check the full-year coverage box on your tax return.  You will not need to use Form 1095-C to help complete your return because the information about the offer of health coverage made by your employer relates to whether you are eligible for the premium tax credit and you cannot get a premium tax credit if you were not enrolled in a health plan in the Marketplace.  You will not attach Form 1095-B or Form 1095-C to your tax return, but you should keep both forms with your tax records.

9. Will I get a Form 1095-C from each of my employers?

Not necessarily.  You will only receive a Form 1095-C from your employer if that employer is an applicable large employer, meaning it had 50 or more full-time employees (including full-time equivalent employees) in the year before the year to which the form relates.  Most employers have fewer than 50 employees and therefore are not applicable large employers required to provide Form 1095-C to their full-time employees.

Even if your employer is an applicable large employer, you will only receive a Form 1095-C for that employer if you were a full-time employee for that employer for at least one month of the year or if you are enrolled in an applicable large employer’s self-insured health plan, even if you are a part-time employee. 

10. How are the forms similar?

·       They all provide information about your health coverage during the prior year.

·       They are all used to determine if you, your spouse and your dependents had health coverage for the entire year and if not, for which months you did have coverage.  (The Form 1095-C includes this information only if your employer is an applicable large employer and the coverage you enrolled in was a certain kind of coverage referred to as “self-insured coverage”).

·       None of these forms should be filed with your tax return; they should be kept for your records with your other tax documents.

11. How are the forms different?

·         The forms are provided by different entities.         

o    Form 1095-A, Health Insurance Marketplace Statement, is provided by the Marketplace to individuals who enrolled or who have enrolled a family member in health coverage through the Marketplace.

o    Form 1095-B, Health Coverage, is provided by insurance companies and other coverage providers.  However, if your coverage was insurance purchased through the Marketplace or was a type of coverage referred to as “self-insured coverage” that was provided by an applicable large employer, you will receive a different form.

o    Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, is issued by applicable large employers to their full-time employees and, in some cases, to other employees.

·      The forms are provided to different groups of people.

·       Form 1095-A - Only individuals who enroll in coverage through the Marketplace will get this form.

·       Form 1095-B – Individuals who have health coverage outside of the Marketplace will get this form (except for employees of applicable large employers that provide self-insured coverage, who will receive Form 1095-C instead).

·       Form 1095-C - Individuals who work full-time for applicable large employers will get this form.  Also, part-time employees also will get this form if they enroll in self-insured coverage provided by an applicable large employer.

·       The forms contain some different information.  Form 1095-A, Form 1095-B, and some Forms 1095-C show who in your family enrolled in health coverage and for what months. Form 1095-A also provides premium information and other information you will need to reconcile advance payments of premium tax credit and claim the premium tax credit on Form 8962.  And Form 1095-C shows coverage that your employer offered to you even if you chose not to take that coverage.

12. What do I need to do with these forms?

·      You will use the information on these forms to verify that you, your spouse and any dependents had coverage for each month during the year.

·       Like last year, if you and your family members had minimum essential coverage for every month of the year, you will check a box on your return to report that coverage.  If you or any family members did not have coverage for the entire year, a coverage exemption may apply for the months without coverage.  If you or any family members did not have coverage or an exemption, you may have to make an individual shared responsibility payment.

·       If you or anyone in your family receives a Form 1095-A from the Marketplace, you will use the information on the form to complete a Form 8962 to reconcile any advance payments of the premium tax credit or to claim the premium tax credit.
·       Do not file these forms with your tax return.  Keep them in your records with your other important tax documents.

13. What should I do if:

·         I have a question about the form I received,

·         I think I should have gotten a form but did not get it,

·         I need a replacement form, or

·         I believe the form I received has an error?

In any of these situations, you should contact the provider of the form (or the entity that you think should have provided you a form, if you think you should have gotten a form but did not get it):

·       For questions about the Form 1095-A, contact the Marketplace.

·       For questions about the Form 1095-B, contact the coverage provider (see line 18 of the Form 1095-B for a contact telephone number).

·       For questions about the Form 1095-C, contact your employer (see line 10 of Form 1095-C for a contact telephone number).

14. Can I file my tax return if I have not received any or all of these forms?

If you enrolled in coverage through the Marketplace you will need the information on Form 1095-A to complete Form 8962 to reconcile any advance payments of the premium tax credit or claim the premium tax credit, and to file a complete and accurate tax return.  If you need a copy of your Form 1095-A, you should go to HealthCare.gov or your state Marketplace website and log into your Marketplace account, or call your Marketplace call center.  Although information from the Form 1095-C – information about an offer of employer provided coverage -  can assist you in determining eligibility for the premium tax credit, it is not necessary to have Form 1095-C to file your return.  See Publication 974 for additional information on claiming the premium tax credit. 

You do not have to wait for either Form 1095-B or 1095-C from your coverage provider or employer to file your individual income tax return.  You can use other forms of documentation, in lieu of the Form 1095 information returns to prepare your tax return.  Other forms of documentation that would provide proof of your insurance coverage include:

·       insurance cards,

·       explanation of benefits

·       statements from your insurer,

·       W-2 or payroll statements reflecting health insurance deductions,

·       records of advance payments of the premium tax credit and

·       other statements indicating that you, or a member of your family, had health care coverage.

If you and your entire family were covered for the entire year, you may check the full-year coverage box on your return.  If you or your family members did not have coverage for one or more months of the calendar year, you may claim an exemption or make an individual shared responsibility payment.

You will not need to send the IRS proof of your health coverage.  However, you should keep any documentation with your other tax records.  This includes records of your family’s employer-provided coverage, premiums paid, and type of coverage.

15. Am I required to file a tax return if I receive one of these forms?

If you receive a Form 1095-A, Health Insurance Marketplace Statement, showing that advance payments of the premium tax credit were paid for coverage for you or your family member, you generally must file an individual income tax return and submit a Form 8962 to reconcile those advance payments, even if you would not otherwise be required to file a tax return.  You also must file an individual income tax return and submit a Form 8962 to claim the premium tax credit, even if no advance payments of the premium tax credit were made for your coverage.  For more information, see the instructions to Form 8962,

However, you are not required to file a tax return solely because you received a Form 1095-B or a Form 1095-C.  For example, if you are enrolled in Medicaid you will receive a Form 1095-B.  If you do not have a tax filing requirement, you do not have to file a tax return solely because you received the Form 1095-B reflecting your Medicaid coverage.

The health care law tax filing requirements are the same as last year. 

·       If you enrolled in coverage through the Marketplace, you must file a tax return and reconcile any advance payments of the premium tax credit that were paid on your behalf. 

·       If you have a filing requirement and everyone in your family had coverage for the entire year, you should check the full-year coverage box on your tax return. 

·       If you or any family members did not have coverage for the entire year, you should claim any applicable coverage exemption or make an individual shared responsibility payment.

16. Should I attach Form 1095-A, 1095-B or 1095-C to my tax return?

No.  Although you may use the information on the forms to help complete your tax return, these forms should not be attached to your return or sent to the IRS.  The issuers of the forms are required to send the information to the IRS separately. You should keep the forms for your records with your other important tax documents.

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Until next time,

Andrew Herman, President
AH Insurance Services, Inc.