Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • The IRS has several tools for checking the health insurance status of taxpayers
  • Taxpayers should check the health insurance status on IRS Form 1040, line 61
  • Health insurance providers must file a report on insurance status for every insured individual
  • Employers and health plan sponsors report to IRS for every person covered with minimum essential coverage

The Affordable Care Act added a section to the Internal Revenue Code directly on the point of reporting coverage. The ACA added section 6055 which applies to coverage providers.

Section 6055 works with section 5000 to respectively require reporting of minimum essential coverage and compliance with the individual mandate.

Comparison shopping is a powerful tool for finding the best value in Obamacare health insurance coverage. Enter your zip code into our free comparison tool today!

Section 6055 Providers of Essential Coverage

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The IRS requires every insurance provider to file an annual report that identifies every insured person and confirms their compliance with the individual mandate. Section 6055 applies to every provider of minimum essential coverage.

This level of content is the feature of health plans that meets the requirements of the Affordable Care Act for fairness, equal treatment of subscribers, and quality health coverage.

These provisions reinforce individual tax filing requirements.

  • Section 6055 applies to insurance providers
  • Section 6055 applies to self-funding employers
  • Section 6055 applies to plan sponsors

Not only does section 6055 have the powerful tool of reports from insurance providers, but it also requires information for consumers. Consumers also get information from the Marketplace if they have used premium tax credits.

When filing, taxpayers will be prepared to answer and document questions about health insurance coverage.

The IRS code defines coverage that meets the individual mandate as minimum essential coverage.

The level of coverage needed consists of a minimum actuarial value of 60 percent, limits on annual consumer spending and deductibles, and the ten essential health benefits.

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The Individual Mandate

The individual mandate requires coverage for individuals and households for which a head of household might be responsible.

In enforcing Section 5000a, the IRS took the position that a tax filing was not complete if it lacked the required information about health insurance coverage.

They could hold, delay, or reject filings that did not answer the specific inquiries about health insurance compliance with the individual mandate.

The individual mandate has two components:

  1. The requirement for health insurance in the Affordable Care Act
  2. The penalty provision enforceable by the IRS in section 5000 of the Internal Revenue Code

The individual mandate is not an absolute or blanket requirement; there are numerous exceptions for individuals, and particularly for those with financial hardship.

Guaranteed Acceptance

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Obamacare reformed the health insurance industry. It banned the use of medical underwriting and pre-existing conditions to deny coverage to applicants. The sole condition for denial is the inability to pay.

IRS requires reports from each provider of qualified health insurance. The rules also require a report from the insurer or the insured that clearly states the status of health insurance coverage for the calendar year.

The Tax Penalty

Those that fail or refuse to get qualified health insurance coverage may face a tax penalty for no insurance. The fee applies to every month in which an individual or family does not have qualifying health insurance coverage.

One should establish the application of forgiveness policies to an individual situation.

The federal government has a policy of forging up to three months of noncoverage in a calendar year in which one otherwise had coverage.

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Exemptions from the Individual Mandate

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Exemptions from the Mandate require documentation and presentation to the Marketplace for review. Upon approval of the exemption request, the Marketplace issues a unique identifier number called an ECN or exemption certificate number.

. Taxpayers must enter their ECN on part 1 of IRS Form 8965. The below-listed items are among the recognized bases for exemptions.

  • Income beneath the filing threshold
  • Income that is not taxable
  • Affordability Exemption for individual or employer-sponsored health plans.

Best Practices for Gathering Records

Taxpayers should collect documentation to support their tax situation. They can show coverage and compliance with the individual mandate, the grounds for an exemption from the mandate, or that the mandate does not apply to them due their status.

The below-listed forms are among the most used documents to support compliance with the mandate.

  • Form 1095-A, the official Health Insurance Marketplace Statement for individuals and families.
  • Form 1095-B, Health Coverage to document full or part-year compliance.
  • Form 1095-C, Employer-Provided Health Insurance Offer and Coverage to confirm status and coverage options.

The Employer Mandate

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The Affordable Care Act requires offers of insurance and coverage from large employers. These employers must also report to IRS for every covered individual and every offer of coverage.

The coverage and offers of coverage must meet the requirements for minimum essential coverage.

Employers that fail to comply with the mandate for substantive offers of insurance do not meet the requirements of the Affordable Care Act. They face the employer shared responsibility penalty.

Section 6056 reporting covers the large employer mandate; it applies to firms with fifty or more full-time equivalent employees. Some self-funded firms will have to report under both sections. Large employers that use managed care contractors will report under 6056 only.

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Other Forms of Qualified Coverage

There are several types of qualified coverage that report to the IRS. They include COBRA benefits, TRICARE, and Veterans Administration programs. These forms of qualified coverage will pass the IRS check for health insurance.

The below-described federal programs also pass the IRS test.

  • Medicare is qualified health insurance coverage that reports to the IRS. The Centers for Medicare and Medicaid manage the information process.
  • Medicaid is qualified health insurance coverage under the Affordable care Act. States administer the programs, and proof of coverage will backup the federal tax filing.
  • The Children’s Health Insurance Program or CHIP is qualified insurance coverage. It has minimum essential coverage for children and adolescents.

Modified Community Rating

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Insurers must accept every applicant with the ability to pay. Once accepted, Obamacare prohibits pricing based on individual characteristics. This requirement is an essential part of qualified health insurance.

The IRS bases the requirement for information on providers that meet the insurance quality elements of the Affordable Care Act.

Only the qualified health plans comply with the Affordable Care Act individual mandate.

Qualified health plans must treat applicants equally in terms and pricing.

Exceptions to Community Rating

Qualified health plans may discriminate on price, but only within the rules established by the federal government. The below-listed items describe the exceptions and their limits.

  • Age is an exception to community rating, and insurers may raise premiums based on age. Obamacare limits the possible increase; the oldest member may not be charged more than three times the amount charged to its youngest member.
  • Location is an accepted factor in pricing medical services. Some areas of the US are isolated and chronically under-served. Medical costs are higher in such locations, and it is a factor tat insurers may add to costs in qualified health plans.
  • Family size is a permitted factor in setting prices. Qualified health plans may charge more for families than individuals on a per person basis. This price differential is due because of the range of age and factors in household members and dependents.
  • Type of plan is a permissible reason to charge at different rates. The Affordable Care Act establishes four types of plans and the actuarial value of each type. They offer significantly different degrees of costs and coverage, and insurers may charge higher rates for more extensive coverage.
  • Tobacco Usage is a leading cause of severe disease and illness. It contributes significantly to the costs of healthcare in the US. Insurers can treat tobacco users differently when providing minimum essential coverage. They can charge one-and-one-half the amount charged to non-tobacco users.

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Individual Reporting to IRS

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The tax laws require reporting by individual taxpayers and those filing jointly. The individual or joint tax return is the final way that IRS gets information on health insurance coverage.

Taxpayers must confirm the information from insurers, plan sponsors, and self-funded employers. The IRS requires the below-listed forms from taxpayers.

  • Line 61 on the standard 1040 report of income form asks the individual’s healthcare status.
  • Form 1040A the health insurance acknowledgment is line 38.
  • Form 1040EZ the health insurance status line is line number 11.

Rejecting Line 61

The initial IRS policy position on line 61 was to reject filings that left the box unchecked. A blank response neither confirmed or admitted the individual’s health insurance status.

The IRS has maintained that regardless of their enforcement policy, the individual mandate is still the law until changed by the Congress.

The Agency has options to approach the line 61 issue from some vantage points, so far, they have accepted forms without the line 61 designation.

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