Tax Forms 1095: What They Do and When You’ll Need Them

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Navigating tax season can be perplexing, particularly when encountering unfamiliar documents like a Form 1095. If you’ve received a 1095 tax form and are uncertain about its significance, you are not alone. While electronic tax filing gains traction and is broadly advised, statistics from the Internal Revenue Service indicate that approximately 125 million paper returns are still processed annually. This illustrates the continued reliance on traditional methods in tax administration.

For seasoned taxpayers, managing essential documents such as W2s and various 1099 forms often becomes routine. However, certain forms, like the 1095-C, may still cause confusion. Many individuals, upon receiving a 1095-C alongside their W2s, may recognize it pertains to their health insurance coverage, but its specific purpose can remain unclear.

Such uncertainty is a common concern during tax season. Even though most tax errors are readily corrected, a FASTNET survey from 2025 reveals that 25% of taxpayers express worry about making errors during the filing process. This apprehension is most pronounced among younger demographics, with 33% of Gen Z and 27% of Millennials reporting concern. For Gen X filers, the figure is 22%, and for Baby Boomers, it is 20%.

Continue reading for comprehensive information regarding Form 1095. For further tax guidance, investigate if your state offers a child tax credit and discover methods to convert student loan payments into tax deductions. Additionally, explore FASTNET’s 2025 rankings of the best tax filing software available.

Understanding Form 1095-C for Tax Purposes

Form 1095-C, officially termed the ‘Employer-Provided Health Insurance Offer and Coverage Form,’ is a document that certain employers are obligated to provide to their employees during tax filing season. It serves as confirmation that employees were enrolled in, or eligible for, employer-sponsored health insurance for each month of the preceding year. It’s important to note that Form 1095-C is one of several versions of Form 1095, which will be discussed further.

Organizations with 50 or more full-time employees, categorized as “Applicable Large Employers,” are mandated to file Form 1095-C for all employees working at least 30 hours per week. Therefore, receiving a 1095-C indicates you are enrolled in, or were offered enrollment in, your company’s health plan.

Do You Need Form 1095-C for Tax Filing?

The concise answer is no, not anymore. The 1095 tax forms were initially implemented in 2015 as part of the Affordable Care Act’s “individual mandate.” This mandate required most U.S. residents to maintain qualifying health insurance throughout the year, with potential financial penalties for non-compliance. Form 1095 tax forms served as proof of health insurance coverage to the federal government, demonstrating adherence to this mandate.

However, as of 2024, the individual mandate is no longer in effect. Consequently, individuals are no longer penalized at the federal level for lacking health insurance for any period. This change offers significant relief, particularly for those experiencing gaps in employment or struggling to afford marketplace health insurance plans. According to tax professionals, the primary purpose of the form now rests with employer compliance.

“The elimination of the individual mandate has largely diminished the utility of Form 1095-C,” stated Jassen Bowman, an IRS enrolled agent and tax specialist, in correspondence with FASTNET. “Large employers, those with over 50 employees, are still required to offer health insurance and face penalties for failing to do so. Therefore, Form 1095-C primarily serves as a mechanism for employers to demonstrate compliance.”

Bowman further clarified that California, the District of Columbia, Massachusetts, New Jersey, and Rhode Island maintain individual mandates at the state or district level. Residents in these locations may need to provide health insurance information using forms like the 1099-HC in Massachusetts when filing state tax returns. Vermont also requires reporting health insurance information on state returns, though it does not impose penalties for lacking coverage, unlike the aforementioned states.

Understanding Forms 1095-A and 1095-B

While the alphabet may begin with ABC, navigating the 1095 tax forms extends beyond simple enumeration. As previously explained, Form 1095-C relates to employer-provided health insurance, still the most prevalent source of health coverage in the United States. Census Bureau data from 2023 indicates that approximately 54% of the over 305 million insured Americans received health insurance through an employer.

Form 1095-A is issued to individuals who obtained health insurance through marketplaces established by the Affordable Care Act. Form 1095-B, conversely, is typically provided by health insurance providers themselves. It details the specifics of your health insurance plan, including the type of coverage and individuals covered under the policy. For a deeper understanding, explore the distinctions between tax credits and deductions.