Tax season is here, and people are wondering how to report Tricare health coverage on a federal income tax return. The Affordable Care Act (ACA), sometimes called Obamacare, requires that all Americans have qualifying health care coverage, called minimum essential coverage (MEC). If you do not have MEC for the entire year, you may have to pay a penalty for not having the required health care coverage. Most Tricare health coverage meets the requirements for MEC.
Tricare coverage that meets the requirement of minimum essential coverage includes:
- Prime,
- Standard,
- Tricare for Life,
- Overseas,
- Remote, and
- Uniformed Services Family Health Plan,
- Tricare Young Adult,
- Tricare Reserve Select, and
- Tricare Retired Reserve.
Tricare Plus, available to dependent parents of military members, does not meet the MEC requirements of the ACA.
The Forms
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 17 January 2017, 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 2017.
You need to print out or keep an electronic copy of these forms for your records, but you don't have to submit a copy to the Internal Revenue Service (IRS) with your income tax return. You just have to ensure that you check the appropriate box on your income tax return.
1040EZ
If 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 2016 calendar year, then you can check the box and continue. Easy!
1040A
The 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 2016 calendar year, then tick the box and move on to the rest of the form.
Please be sure that you understand that checking this box means that every person covered by this tax form, as indicated by being listed on line six, has had eligible coverage for the entire year. If someone who is included on this tax return does not have MEC, then you are dealing with a more complicated situation. These directions do not apply. If you're not sure what to do next, please get help from a competent tax professional. Options include your base's Volunteer Income Tax Assistance (VITA) program, an accountant or other tax professional.
Form 1040
The 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 2016 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 2016 calendar year, or if you have some family members who were not covered, then your reporting requirements may be different. Please seek assistance to ensure that you are reporting health care coverage accurately. You can go to your base's Volunteer Income Tax Assistance (VITA) program, an accountant or other tax professional for help.
This is the second year that we're reporting health care coverage in this fashion, so hopefully there will be a lot less confusion this year! Let me know if you have questions!
Other great tax-related content:
From The Mailbag: Are Military Uniforms Tax Deductible?
Wait For Tax Statements Before You File
2016 Military Tax Statements Release Dates
What Is Income Tax Withholding and Why You Want To Get It Right
