What Is the Difference Between 1095-B and 1095-C Forms?

Tax forms related to health insurance can be confusing, especially when they have similar names. Forms 1095-B and 1095-C both report health coverage information but serve different purposes depending on who provides the insurance and the type of plan offered. Understanding these differences is important for accurate tax filings and avoiding IRS issues.

While both forms relate to health coverage, they come from different sources and contain distinct details about your insurance.

What 1095-B Illustrates

Form 1095-B reports whether an individual had minimum essential coverage (MEC) for the tax year. This form helps confirm compliance with the Affordable Care Act (ACA), though the federal individual mandate penalty was reduced to $0 in 2019. However, some states, including California, New Jersey, and Massachusetts, still impose penalties for not having MEC, making this form relevant for state tax filings.

The form includes details about the policyholder and any dependents covered under the plan. It specifies the months during which coverage was active, which is useful for verifying continuous insurance, especially in states with mandates.

Health insurance providers, such as insurance companies and government programs like Medicaid and the Children’s Health Insurance Program (CHIP), issue this form. Unlike employer-sponsored plans that fall under different reporting rules, 1095-B is typically associated with individual market plans, government-provided insurance, and small employer-sponsored plans that do not meet the ACA’s definition of an applicable large employer (ALE).

What 1095-C Illustrates

Form 1095-C reports employer-provided health insurance for employees of companies classified as Applicable Large Employers (ALEs) under the ACA. These businesses, defined as having 50 or more full-time employees (including full-time equivalents), must offer health coverage that meets ACA standards. The form helps the IRS determine whether an employer has complied with the ACA’s employer mandate and whether an employee might qualify for premium tax credits if they purchased insurance through the Health Insurance Marketplace.

Each 1095-C details whether an employee was offered coverage, the type of plan available, and whether it met ACA affordability standards. For 2024, a plan is considered “affordable” if the employee’s required contribution for self-only coverage does not exceed 8.39% of their household income. The form also includes specific codes in Part II that indicate whether coverage was offered, the lowest-cost premium available, and whether the employee enrolled. These codes allow the IRS to assess whether an employer may be subject to penalties under Internal Revenue Code (IRC) Section 4980H(a) or (b) for failing to offer qualifying coverage.

If an ALE does not provide MEC to at least 95% of its full-time employees, it may face a penalty under Section 4980H(a). If the coverage offered is not considered “affordable” or does not provide minimum value, the employer could face an additional penalty under Section 4980H(b). These penalties are adjusted annually for inflation, with 2024 penalties set at $2,970 per full-time employee for the “A” penalty and $4,460 per affected employee for the “B” penalty.

Issuing Entities

The organizations responsible for distributing Forms 1095-B and 1095-C differ based on the type of health coverage being reported. Insurance providers, including private insurers and government programs, issue Form 1095-B. This includes companies offering individual market plans and federal or state programs such as Medicaid and Medicare Part A.

Form 1095-C, on the other hand, is issued by employers that qualify as ALEs. These businesses must generate the form for each full-time employee, regardless of whether the individual accepted or declined coverage. Many companies use third-party payroll and benefits administrators to handle reporting obligations, as ACA compliance can be complex. Errors in filing can lead to IRS penalties or audits.

Key Differences in Coverage

While both Forms 1095-B and 1095-C report health insurance information, they differ in how they apply to employers and individuals. These distinctions stem from employer size, the scope of coverage reported, and the specific data included on each form.

Employer Size

One of the most significant differences between the two forms is the size of the employer responsible for issuing them. Form 1095-C is used exclusively by Applicable Large Employers (ALEs), defined as businesses with at least 50 full-time employees, including full-time equivalents (FTEs). Full-time status is defined as working at least 30 hours per week or 130 hours per month. Employers that meet this threshold must comply with the ACA’s employer mandate, which requires them to offer MEC to at least 95% of their full-time workforce to avoid penalties under IRC Section 4980H.

Form 1095-B, in contrast, is generally issued by insurers and smaller employers that do not meet the ALE threshold. Small businesses with fewer than 50 full-time employees are not required to provide health insurance under the ACA. However, if they do offer coverage—particularly through fully insured plans—the insurance provider, not the employer, is responsible for issuing Form 1095-B. Misclassifying employer size can lead to compliance issues and potential IRS penalties.

Coverage Scope

The type of health coverage reported on each form also differs. Form 1095-B focuses on whether an individual had MEC for any given month during the tax year. It applies to a broad range of health plans, including individual market policies, government-sponsored programs like Medicaid and Medicare Part A, and employer-sponsored plans from small businesses. The form does not indicate whether an offer of coverage was made—only whether the individual was enrolled in a qualifying plan.

Form 1095-C, however, provides more detailed information about employer-sponsored health insurance. It confirms whether an employee was covered, specifies whether an offer of coverage was made, and indicates whether the plan met ACA affordability and minimum value standards. The minimum value standard requires that a plan cover at least 60% of total allowed costs for essential health benefits. This distinction is important for employees who may be eligible for premium tax credits through the Health Insurance Marketplace.

Data Included

The information on each form varies based on its purpose. Form 1095-B contains basic details, including the name, Social Security number (or Taxpayer Identification Number), and coverage months for the policyholder and any dependents. It also identifies the insurance provider responsible for issuing the form. Because its primary function is to verify continuous health coverage, it does not include employer-specific details or affordability metrics.

Form 1095-C, in contrast, includes a more complex set of data points. Part II of the form contains IRS codes that indicate whether an offer of coverage was made, the lowest-cost premium for self-only coverage, and whether the employee enrolled. These codes, found in Line 14 (Offer of Coverage) and Line 16 (Safe Harbor and Other Relief), help the IRS determine whether an employer has met its ACA obligations. Employers must ensure accurate coding, as incorrect entries could result in IRS penalties under IRC Section 6721 for failing to file correct information returns.

When You Might See Both Forms

Some individuals may receive both Forms 1095-B and 1095-C in the same tax year, depending on their coverage situation. This typically happens when an employee’s health insurance involves multiple sources, such as a fully insured employer-sponsored plan or a transition between different types of coverage.

Employees working for an ALE that offers a fully insured health plan will receive Form 1095-C from their employer, detailing the offer of coverage and affordability information. However, because the actual insurance is provided by an external insurer, that company is responsible for issuing Form 1095-B, which confirms enrollment. This means an employee could receive both forms—1095-C showing what was offered and 1095-B verifying actual coverage. Similarly, individuals who switch from employer-sponsored insurance to a government program like Medicaid mid-year may receive a 1095-C for the months they were covered by their employer and a 1095-B from Medicaid for the remainder of the year.