What 1095-B vs 1095-A Reveals About Your Clients’ Financial Health

As a financial advisor, you know that even a small tax form can tell a big story. The difference between 1095-B vs 1095-A goes beyond paperwork — it reveals how your clients access health coverage, what subsidies they receive, and how that may influence their broader financial plan.

Here’s a quick overview:

• Form 1095-B comes from private insurers or government programs like Medicaid. It simply verifies that your client had qualifying minimum coverage during the year.
  
  

• Form 1095-A comes from the Health Insurance Marketplace and includes important details about advance premium tax credits (APTC) and coverage months.
  
  

If a client has Form 1095-A, they must reconcile any advance payments of the premium tax credit when filing their tax return — a step that can significantly affect their final tax liability and adjusted gross income (AGI).

How Can 1095 Forms Signal Financial Stability or Risk?

When reviewing your client’s financial documents, these forms can reveal insights that go beyond compliance.

• Form 1095-B often reflects consistent employment or stable group coverage. Clients with this form likely have predictable premium costs and steady income.
  
  

• Form 1095-A, however, often indicates self-employment, transitional work, or variable income levels — factors that can create planning opportunities or potential volatility.

  
  

As an advisor, noticing which form your client receives can help you identify:

• Whether they may qualify for premium tax credits or cost-sharing reductions
  
  

• If income management throughout the year could avoid future tax liabilities
  
  

• Whether their insurance and tax strategy align with their long-term goals
  
  

Why Does 1095-A Require Extra Attention?

Unlike 1095-B, Form 1095-A includes a section on advance premium tax credits that must be reconciled on Form 8962. This means your client’s actual income can either increase their refund or create an unexpected balance due.

Financial advisors can use this as a proactive planning opportunity. If a client’s income fluctuates, you can:

• Coordinate with their tax professional to estimate their annual income more accurately
  
  

• Adjust retirement contributions or business deductions midyear to manage AGI
  
  

• Discuss potential implications for future health coverage affordability
  
  

Even though you’re not preparing the tax return, you can help clients think strategically about income timing and expense management — which reinforces your value as a holistic advisor.

What 1095-B vs 1095-A Tells You About a Client’s Income Profile

Health coverage forms are like income barometers. Here’s what they might signal:

Form 1095-B

The 1095-B form is issued to clients who had employer-sponsored or Medicaid coverage during the tax year. For clients receiving this form, the typical Advisor Insight is that they likely have a stable income and will face minimal ACA reconciliation issues, as their coverage was not obtained through the health insurance marketplace with subsidies.

Form 1095-A

The 1095-A form is provided to clients who had a Marketplace plan with subsidies (Premium Tax Credits). The presence of this form signals a Common Client Scenario where the client has a variable income. The critical Advisor Insight here is the potential for tax credit adjustments (reconciliation), which means the client may owe money or receive a refund depending on how their estimated income compares to their actual income.

Both Forms

A client may receive Both Forms if they had multiple coverage sources throughout the year. This signifies a Transition period, such as moving from a job with employer coverage to an individual marketplace plan, which creates a potential for overlap or coverage gaps. An advisor must carefully review both forms to ensure the client is not penalized for periods of no coverage or double-dipping on premium subsidies.

For example, if a client switched from employer coverage to a Marketplace plan midyear, their AGI management becomes more important than ever. Changes in income could retroactively affect subsidy eligibility, creating a tax bill they didn’t expect.

How Financial Advisors Can Use This Information Strategically

Knowing the difference between 1095-B vs 1095-A helps advisors provide higher-level guidance:

• Tax Planning: Coordinate with CPAs to manage AGI, ensuring clients stay within premium credit thresholds.
  
  

• Cash Flow Management: Help clients plan for potential repayment of subsidies or adjust estimated tax payments.
  
  

• Retirement Planning: Recommend contribution strategies that reduce AGI, such as maximizing traditional IRA or HSA contributions.
  
  

• Insurance Review: Evaluate whether clients might benefit from exploring employer options or adjusting coverage tiers during open enrollment.
  
  

Every one of these actions reinforces your advisory value and helps clients feel supported year-round, not just during tax season.

Common Mistakes Clients Make with 1095-A and 1095-B

Clients often overlook how these forms connect to their overall financial picture. Watch for these common issues:

• Ignoring Form 1095-A: Failing to reconcile the premium tax credit can delay refunds or trigger IRS correspondence.
  
  

• Reporting Errors: Entering incorrect advance payment amounts can inflate or reduce their refund inaccurately.
  
  

• Assuming Coverage Equals Compliance: Having a 1095-B doesn’t mean they can ignore changes to income or coverage throughout the year.
  
  

• Skipping Documentation: Clients often forget to retain copies, which can complicate IRS verifications later.

  
  

Helping your clients organize and review these forms early keeps their tax season (and yours) stress-free.

When Should Advisors Step In?

You don’t need to be a tax preparer to add value here. Use the annual review process to ask questions like:

• “Have you received any health coverage forms yet?”
  
  

• “Did you change insurance or income sources this year?”
  
  

• “Do you want me to coordinate with your tax professional to confirm how your coverage affects your AGI?”
  
  

These small touchpoints build trust and ensure your financial planning integrates with the client’s broader compliance picture.

Turn 1095 Insights into Client Value

Understanding 1095-B vs 1095-A helps financial advisors look beyond the tax return and identify patterns that affect income stability, coverage needs, and eligibility for credits. These forms don’t just verify insurance — they highlight opportunities to align income planning, tax efficiency, and healthcare strategy.

If you want to deliver this kind of proactive insight without the administrative burden, Jalada can help. Let’s talk.

Disclaimer: This material is provided for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA for guidance on the specific tax situation.