How to File Form 1095-C for Employers

Form 1095-C reports information about health coverage offers made by Applicable Large Employers (ALEs) to full-time employees under the Affordable Care Act (ACA). This form demonstrates an employer’s compliance with the ACA’s employer shared responsibility provisions. Correctly filing Form 1095-C is a requirement for employers to meet their annual reporting obligations to the Internal Revenue Service (IRS). The information on this form also assists employees in determining their eligibility for premium tax credits if they obtained coverage through a Health Insurance Marketplace.

Understanding the Filing Obligation

Employers must determine if they qualify as an Applicable Large Employer (ALE) to understand their filing obligation for Form 1095-C. An employer is considered an ALE for a calendar year if they employed an average of at least 50 full-time employees, including full-time equivalent (FTE) employees, during the preceding calendar year. Full-time employees are those who work at least 30 hours per week, or 130 hours of service in a month.

To calculate FTEs, employers add the total hours worked by all part-time employees for each month of the preceding year and divide that sum by 120. This calculation converts part-time hours into full-time equivalents, which are then added to the number of full-time employees. If the combined total averages 50 or more, the employer is an ALE. As an ALE, the employer is subject to the ACA’s employer shared responsibility provisions, which require offering minimum essential coverage that is affordable and provides minimum value to full-time employees. Form 1095-C is the mechanism through which ALEs report on these offers to the IRS and to their employees.

Information Needed for Form 1095-C

Before completing Form 1095-C, employers need to gather specific information. This includes identification details for both the employee and the employer. Employers must collect each employee’s full name, Social Security Number, and complete address. Similarly, the employer’s legal name, Employer Identification Number (EIN), and business address are required for the form.

Information about the health coverage offered is also necessary. This involves recording the lowest-cost monthly premium for self-only minimum essential coverage that provides minimum value, offered to the employee. Employers must also have data on file regarding whether coverage was offered to the employee’s spouse and dependents. This data helps in selecting the correct offer of coverage codes for each month of the year.

For employers sponsoring self-insured health plans, additional information is needed for Part III of the form. This includes the names, Social Security Numbers (or dates of birth if an SSN is unavailable), and months of coverage for all individuals covered under the plan. This applies not only to the employee but also to any covered spouses or dependents. Maintaining meticulous payroll, benefits, and enrollment records throughout the year is important for compiling this comprehensive data.

Completing Form 1095-C

Form 1095-C is divided into three main parts, each requiring specific details related to the employer’s offer of health coverage. Part I focuses on identifying information for both the employee and the Applicable Large Employer (ALE). This section requires the employee’s name, Social Security Number, and address, along with the ALE’s name, EIN, and address. Ensuring the accuracy of this foundational data is important for proper identification by the IRS and the employee.

Part II details the offer of coverage made to the employee for each month of the calendar year. This section uses specific codes to communicate whether an offer of minimum essential coverage was made, what type of offer it was (e.g., to employee only, or employee, spouse, and dependents), and if it met affordability standards. Line 14 utilizes a series of codes to indicate the offer of coverage. Line 15 reports the employee’s share of the lowest-cost monthly premium for self-only coverage. Line 16 uses codes to indicate reasons for not owing an employer shared responsibility payment, or other reporting scenarios such as the employee not being employed or not being full-time for a given month.

Part III of Form 1095-C is completed only by ALEs that offer self-insured health coverage. This section lists the individuals who were covered under the self-insured plan for at least one day in any month of the calendar year. For each covered individual, the employer must provide their name, Social Security Number (or date of birth if an SSN is not available), and indicate the months they were covered.

Filing with the IRS

After completing all necessary Form 1095-C documents, employers must submit them to the Internal Revenue Service (IRS) along with Form 1094-C. Form 1094-C serves as the transmittal form, providing a summary of the employer’s health coverage offers and transmitting the individual Forms 1095-C. It includes information about the ALE, such as the total number of Forms 1095-C being submitted, and indicates whether the employer is claiming transition relief.

Employers who file 10 or more information returns of any type, including Forms 1095-C and W-2, must file them electronically. This electronic filing is conducted through the IRS’s Affordable Care Act Information Returns (AIR) Program. Employers must obtain a Transmitter Control Code (TCC) to submit forms via the AIR system.

For employers filing fewer than 10 information returns, paper filing remains an option. The paper forms, accompanied by Form 1094-C, must be mailed to the IRS at the address specified in the form instructions. The general deadline for paper filing with the IRS is February 28 of the year following the calendar year of coverage. The deadline for electronic filing is March 31. Employers can request an automatic 30-day extension of time to file with the IRS by submitting Form 8809.

Providing Statements to Employees

Employers have an obligation to furnish a copy of Form 1095-C to each full-time employee for whom they are required to file the form with the IRS. This statement provides employees with information about the health coverage offered to them, which they may need for their individual tax returns. The deadline for furnishing these statements to employees has been permanently extended to March 2 of the year following the calendar year of coverage. If this date falls on a weekend or holiday, the deadline shifts to the next business day.

Forms 1095-C can be furnished to employees through various acceptable methods. The most common method is by mail, ensuring the form is properly addressed and sent to the employee’s last known permanent address. Alternatively, employers can provide the statements electronically, but this requires the employee’s affirmative consent. The consent must be obtained in a manner that ensures the employee can access the statement electronically.

Employers should retain proof of furnishing these statements to employees. This might include maintaining mailing logs or electronic delivery confirmations. Penalties can apply for failing to furnish correct statements to employees by the deadline. Establishing a clear and consistent process for distributing these forms is an important aspect of ACA compliance.