Now that the tax preparation season has started, we're getting questions about reporting health care coverage on your income tax return. The Affordable Care Act, enacted in 2010, requires that all Americans have qualifying health care coverage, called minimum essential coverage (MEC) for the entire year, or pay a penalty for not having the required health care coverage. Tricare health coverage is considered MEC. Tricare health coverage is available to military members and their families, retirees and their families, Survivor Benefit Plan annuitants, and former spouses who have Tricare coverage under provisions of the 20-20-20 rule.
Tricare coverage that meets the requirement of minimum essential coverage includes:
- Tricare for Life,
- Remote, and
- Uniformed Services Family Health Plan, and also
- Tricare Young Adult,
- Tricare Reserve Select, and
- Tricare Retired Reserve.
While the tax return process is the same as last year, there is new documentation for the 2015 tax year. The Defense Finance and Accounting Service (DFAS) will be issuing 1095 tax forms to Tricare beneficiaries. There are two different forms that will be issued by DFAS:
IRS Form 1095-B (for Military Retirees, Annuitants and Former Spouses,) or
IRS Form 1095-C (for Active Duty Military and Federal Civilian Employees.)
These forms will be available through the online myPay account access system on 13 January 2016, for those who have elected electronic tax statement distribution. For those who receive their tax statements through the mail, they will be mailed between 10 and 31 January 2016.
Here's the thing about those forms: while you need to have them available, either electronically or on paper, you don't actually have to submit them to the Internal Revenue Service (IRS) with your income tax return. As long as you had MEC for the entire year, and it is accurately reported on either a form 1095-B or form 1095-C, then all you have to is check the appropriate box on your income tax return.
1040EZIf you file the 1040EZ, the health care question is located on line 11 of the form. If your spouse (if applicable) and you were both covered by acceptable Tricare health insurance (as listed above) for the entire 2014 calendar year, then you can check the box and continue. Easy!
1040AThe form 1040A form poses the health care question on line 38, on page two of the form. If everyone claimed on this tax form was eligible for acceptable Tricare coverages (as listed above) for the entire 2015 calendar year, then tick the box and move on to the rest of the form.
Please be sure that you understand that you are indicating that every member covered by the tax form has had eligible coverage for the entire year. If you have dependent parents using Tricare Plus who do not have other MEC, or if your spouse and children don’t have Tricare because you have never enrolled them in the Defense Enrollment Eligibility Reporting System (DEERS), then you are dealing with a more complicated situation. Please reach out to your base's Volunteer Income Tax Assistance (VITA) program, an accountant or other tax professional to ensure that you are reporting health care coverage accurately.
Form 1040The forms may get more complicated, but indicating that you have health care coverage doesn’t get any harder. On the Form 1040, health care identification occurs on line 61, on page two. As with the forms listed above, if everyone represented on this tax form has been covered by qualified Tricare health coverage for the entire 2015 calendar year, your only responsibility is to put a check in the box and continue on with the form.
If you were not covered by Tricare the entire 2015 calendar year, or if you have some family members who were not covered, then your reporting requirements may be different. Please reach out to your base's Volunteer Income Tax Assistance (VITA) program, an accountant or other tax professional to ensure that you are reporting health care coverage accurately.
These new forms will bring lots of questions, and I'd be glad to help you find the answers. Let me know your questions in the comments!