ACA: $0 Penalty for Not Having MEC and Reporting Essentials

The Internal Revenue Service is reminding taxpayers — including mixed‑status families and recent arrivals filing U.S. returns — that while the federal penalty for going without health insurance is set at $0 under the Tax Cuts and Jobs Act, the Affordable Care Act still expects people to maintain minimum essential coverage (MEC) and keep records to match IRS reporting forms during tax season.

That expectation is backed by the annual flow of Forms 1095-A, 1095-B, and 1095-C that the Health Insurance Marketplace, health coverage providers, and certain employers send to both individuals and the IRS. Key deadlines arrive each winter as Americans prepare their returns. For 2025, officials and tax professionals note a change that lightens how broadly Form 1095-C must be distributed, even as employers continue filing these reports with the IRS.

The legal backdrop: Individual shared responsibility and MEC

At the heart of this story is the individual shared responsibility provision of the Affordable Care Act. Under the law:

• Every person listed on an individual income tax return is expected to have qualifying health coverage for each month of the year or to claim a coverage exemption.
• The ACA calls qualifying protection minimum essential coverage (MEC).

If someone does not have coverage and has no exemption, the ACA originally allowed the IRS to assess an “individual shared responsibility payment.” Congress then passed the Tax Cuts and Jobs Act in late 2017 (signed by President Trump), which reduced that payment amount to $0 for months after December 31, 2018. The federal payment was removed but the underlying ACA rule — that people should have MEC and keep proof of coverage — remains.

In practice this means:

• Individuals and families still receive information returns about their coverage.
• Households that received advance premium tax credits still use Form 1095-A to reconcile those advance payments on their federal returns.

Who sends which forms and why they matter

The paperwork is central to accurate filing. Different entities send different forms:

• The Health Insurance Marketplace sends Form 1095-A (Health Insurance Marketplace Statement) to Marketplace enrollees. This form:
  • Shows months of enrollment, family members covered, and the amounts of advance premium tax credit paid.
  • Is required to reconcile advance premium tax credit amounts on the federal return.
  • Must be received before filing if you need to reconcile credits; without it, refunds can be delayed or IRS letters triggered.
  • Official guidance: About Form 1095-A
• Coverage providers (insurers, government programs, small self‑insured employers) send Form 1095-B. This includes:
  • Medicaid, Medicare Advantage, CHIP, small employer self‑insured plans, and individual market plans bought directly from an insurer.
  • Confirms who had coverage and when; filed to the IRS with Form 1094-B.
  • Official guidance: About Form 1095-B and About Form 1094-B
• Applicable Large Employers (ALEs — companies with at least 50 full‑time employees) file Form 1095-C to describe:
  • The coverage offered, months it was available, and the employee’s share of the lowest-cost self‑only premium.
  • Employers file these forms with the IRS along with Form 1094-C.
  • Official guidance: About Form 1095-C and About Form 1094-C

Key deadlines (annual cadence)

• Form 1095-A (Marketplace): February 1 — Marketplace must provide to households.
• Form 1095-B (coverage providers): March 31 — Providers generally furnish to individuals and file with Form 1094-B.
• Form 1095-C (certain employers): March 31 — Employers generally furnish to full‑time employees and file with Form 1094-C.

Employers and providers also follow IRS filing calendars that pair 1095s with their transmittal forms (1094-B or 1094-C).

Important: For 2025 reporting (covering the 2024 calendar year), employers are no longer required to distribute Form 1095-C to all full‑time employees, though they must still file the forms with the IRS. This reduces furnishing burdens but does not change the employer’s filing duty.

Practical guidance for taxpayers (including immigrants and mixed coverage families)

When coverage changes during the year, people often receive multiple forms. To handle them:

• Match each form to the source of coverage:
  • Marketplace plans → Form 1095-A
  • Government plans or private plans outside Marketplace → Form 1095-B
  • Employer offers → Form 1095-C
• Wait for the correct forms before filing, especially if you received advance premium tax credits.
• Line up coverage month by month in tax software or on worksheets to avoid mismatches with IRS records.
• If a form is missing or incorrect, contact the issuer (Marketplace, insurer, or employer) for a corrected copy before filing.

Examples of common mixed‑coverage situations:
– A spouse’s employer plan for January–February, Marketplace coverage March–December → may produce a 1095-C (offer), 1095-A (Marketplace months), and possibly a 1095-B if other months involved non‑Marketplace coverage.
– Moving between states, changing jobs, or adding a child mid‑year can generate multiple forms; keep them all and verify names and Social Security numbers.

Official Marketplace guidance on reading entries: About Form 1095-A

What employers and coverage providers should do

• Continue filing accurate 1095 and 1094 forms with the IRS, ensuring payroll and enrollment records match monthly entries.
• For 2025:
  • Employers must still file Form 1095-C with the IRS but may not have to furnish copies to all full‑time employees.
  • Employers must be prepared to furnish a copy upon request.
• Self‑insured employers may have both 1095-C and 1095-B responsibilities depending on workforce arrangement.
• Maintain internal checklists to verify:
  • Social Security numbers match payroll records
  • Hire/terminate dates align with coverage offers
  • Monthly affordability fields on 1095-C reflect the correct lowest‑cost self‑only premium

Penalties for failing to furnish or file can be significant, though the IRS may provide relief for reasonable cause in some cases.

Special considerations and tips

• Marketplace customers: Reconcile advance premium tax credits using Form 1095-A. If the Marketplace paid more credit than you’re due, you may need to repay part of it; if it paid less, your refund could increase.
• Keep 1095-B forms for records even if you don’t need them to file your federal return.
• If names or SSNs are wrong on any 1095, request corrected forms before filing.
• For limited English or immigrant households, local tax clinics and community groups can help interpret forms and match them to returns.
• Do not guess amounts if 1095-A arrives late or contains errors — contact the Marketplace for corrections.

Quick reference: Forms & links

• Form 1095-A (Health Insurance Marketplace Statement) — due to households by February 1
  • About Form 1095-A
• Form 1095-B (Health Coverage) — generally furnished by March 31
  • About Form 1095-B and About Form 1094-B
• Form 1095-C (Employer‑Provided Health Insurance Offer and Coverage) — generally furnished by March 31
  • About Form 1095-C and About Form 1094-C
• General ACA hub: Affordable Care Act

Bottom line

• Although the federal individual shared responsibility payment has been set at $0 for months after 2018, the ACA’s reporting system remains in place because it supports premium tax credit reconciliation and employer reporting.
• For the filing season: watch the February 1 and March 31 dates, wait for Form 1095-A if you used the Marketplace, save Forms 1095-B and 1095-C if you receive them, and match each month on your return to the months shown on the forms.
• With many households changing plans during the year and employers adapting to the 2025 furnishing adjustment for 1095-C, careful record‑keeping remains the best way to navigate tax season smoothly in the United States 🇺🇸.