What Will the IRS Do With Their ACA DataWith the passage of the Affordable Care Act (ACA), the amount of health insurance information being reported to the IRS has increased exponentially over the last couple of years. Whether it’s the cost of health insurance being reported on an employee’s W-2 or the existence of coverage on the new Form 1095, the IRS is sitting on a treasure trove of ACA data. What will the IRS do with all of that information?

We offer you our “psychic visions” of what the future may hold (in terms of the IRS and ACA data) to help you anticipate and adapt accordingly.

Predictions of Individual Penalties

The IRS recently added a small box on line 61 of Form 1040 that asks whether an individual (or a family) had health insurance for the entire filing year. In the past, when a filer checked that box, the IRS had no way to verify that checkmark.

However, the IRS may now have the data that it needs to crosscheck Form 1095 with Form 1040 to determine whether individuals and families are truthfully reporting their health insurance coverage. The IRS receives these Forms 1095 from the following sources:

  • Form 1095-A from Health Insurance Exchanges (or “Marketplace”) to individuals purchasing health insurance coverage through the Marketplace.
  • Form 1095-B from companies (generally health insurance companies or self-insured company plans) providing health insurance coverage to individuals.
  • Form 1095-C from certain employers to report the coverage offer to employees and the employees who accepted the offer.

Each of these forms has a monthly coverage indicator that highlights any month(s) in which an individual was not covered under a particular plan. Our vision is that if the IRS decides to start matching Form 1040 data against Form 1095 information, then it will begin issuing notices and penalties for failure to maintain individual health coverage.

Forecasts of Employer Penalties

The IRS may now have the data that it needs to start assessing employer penalties under the “play or pay” mandate. In short, this mandate requires certain employers to either offer health insurance coverage to at least 95% of their full-time employees (and their dependents) or face a penalty. Additionally, a different penalty could apply to employers offering “unaffordable” health insurance coverage.


The IRS considers healthcare coverage unaffordable if the amount an employee must pay for “bronze-level” coverage is higher than a certain percentage of his or her household income.

Form 1095-C includes a section in which employers self-report whether they offered minimum essential coverage for each full-time employee. Additionally, employers have to summarize their offer on Form 1094-C, which lists the month(s) in which the employer offered (or didn’t offer) minimum essential coverage. Form 1094-C also has a column in which employers disclose their full-time employee count for a given month. Given the data that the employer discloses on Forms 1095-C and 1094-C, it is possible that the IRS will issue penalties to employers for not offering coverage to their full-time employees.

Additionally, employers will begin receiving more notices from the Marketplace whenever one of their employees earns a Marketplace-issued subsidy. These subsidies may indicate that an employer’s health insurance is unaffordable. The IRS could also receive subsidy information from the Marketplace and match it to Form 1095 records to determine if either penalty applies to any employers.

Is The Future Sooner Than You Think?

Given the amount and types of data the IRS can access, our premonitions may not be that farfetched. Therefore, we can help you ensure that you comply with any Form 1094 or Form 1095 regulations. Contact CRI if you need us to use our crystal ball to anticipate some of these issues and help mitigate your risk for potential IRS penalties.