Do I Need to Enter 1095-C on My Tax Return?

Form 1095-C is a document many taxpayers encounter during tax season, especially those employed by large organizations. As part of the Affordable Care Act’s reporting requirements, it provides essential information about health insurance coverage through an employer. Understanding its role in the tax return process can help ensure compliance and avoid issues.

Purpose of Form 1095-C

Form 1095-C informs employees about the health coverage offered by their employer, as mandated by the Affordable Care Act (ACA). Applicable large employers (ALEs)—those with 50 or more full-time equivalent employees—must issue this form to report the months an employee was covered, the type of coverage, and the cost of the lowest premium available. This helps enforce the ACA’s employer mandate requiring ALEs to offer sufficient and affordable coverage to full-time employees, with non-compliance potentially resulting in penalties under the Internal Revenue Code Section 4980H. The form also aids the IRS in verifying compliance with the individual mandate, which still requires reporting even though the penalty was effectively eliminated in 2019.

Who Receives Form 1095-C

Employees of ALEs, including full-time employees working at least 30 hours per week or 130 hours per month, receive Form 1095-C. Part-time employees offered coverage and former employees, such as retirees or those with COBRA continuation coverage, also receive it. This ensures all eligible individuals have documentation of their health insurance for both personal record-keeping and compliance purposes.

Requirements for Including Form 1095-C

Form 1095-C does not need to be attached to your federal tax return, but it provides key information for determining eligibility for healthcare-related tax credits, such as the Premium Tax Credit. It is particularly useful for accurately completing sections of your tax return if reconciling advance payments received through the Health Insurance Marketplace. While the federal individual mandate penalty has been eliminated, some states, including California and New Jersey, still require proof of insurance for state tax filings. Form 1095-C can be used to demonstrate compliance with these state requirements.

Consequences of Omitting Form 1095-C

Although omitting Form 1095-C from your tax return does not result in penalties, failing to use its information can create discrepancies between your employer’s report to the IRS and your filing. These inconsistencies may trigger IRS inquiries, delaying return processing or refunds. While there are no direct penalties, such discrepancies can lead to audits, which are time-consuming and stressful. Cross-referencing your tax return with Form 1095-C ensures accuracy and avoids unnecessary complications.

What to Do if You Didn’t Receive It

If you haven’t received Form 1095-C, contact your employer’s human resources or benefits department to check its status. Mailing errors or delays may occur, but a direct inquiry often resolves the issue. If your employer cannot provide it, use alternative documentation such as pay stubs, insurance cards, or statements from your health insurance provider to verify your coverage. Keep records of your attempts to obtain the form and any related correspondence with your employer, as these can be helpful if the IRS raises questions about your reported health coverage.