How IRS Verifies Health Insurance Coverage: Explained

How IRS Verifies Health Insurance Coverage: Explained

The Internal Revenue Service (IRS) requires all Americans to have health insurance, but how do they verify that individuals have coverage? In this article, we will explain the process the IRS uses to verify health insurance coverage and provide some tips forselecting the right insurance plan.

What is the process for verifying health insurance coverage with the IRS?

The IRS uses two forms to verify health insurance coverage: Form 1095-A and Form 8962. Form 1095-A is sent to individuals who purchased health insurance through the marketplace, while Form 8962 is used to calculate any premium tax credits an individual may be eligible for.

Individuals who do not have health insurance coverage may be subject to a penalty. The penalty is calculated as a percentage of household income or a flat fee, whichever is greater. In 2018, the penalty was $695 per adult and $347.50 per child, up to a maximum of $2,085 per family, or 2.5% of household income, whichever is greater.

Tips for selecting the right insurance plan

When selecting a health insurance plan, there are several factors to consider. First, consider the monthly premium cost. This is the amount you will pay each month to maintain coverage. Second, consider the deductible. This is the amount you will have to pay out-of-pocket before your insurance coverage kicks in. Third, consider the network of providers. Make sure the plan you select includes the doctors and hospitals you prefer.

It is also important to consider any additional benefits the plan may offer, such as dental or vision coverage. Finally, consider your own health needs. If you have a chronic condition or require frequent medical care, you may want to select a plan with a lower deductible and higher monthly premium.

Insurance case study

For example, let's say a family of four is considering two different health insurance plans. Plan A has a monthly premium of $250, a deductible of $2,500, and a network of providers that includes their preferred doctors and hospitals. Plan B has a monthly premium of $175, a deductible of $5,000, and a network of providers that does not include their preferred doctors and hospitals.

In this case, the family may want to select Plan A, even though it has a higher monthly premium and lower deductible. This is because the network of providers includes their preferred doctors and hospitals, which can be an important factor in managing their healthcare needs.

Conclusion

In summary, the IRS uses Form 1095-A and Form 8962 to verify health insurance coverage. When selecting a health insurance plan, consider the monthly premium cost, deductible, network of providers, additional benefits, and your own health needs. By carefully evaluating your options, you can select a plan that provides the coverage you need at a price you can afford.