Tax season is here, and you’ll get many important documents. You might see the Form 1095-C, an important health insurance statement from the Affordable Care Act. It proves your employer’s health coverage from last year. It shows your health insurance choices, coverage times, and costs. Knowing this helps you report your health insurance correctly on your taxes.

If you’re an employer or an employee getting this form, it’s important to understand it. This guide explains the 1095-C form in detail. It covers the basics and how it affects your taxes.

Key Takeaways

• Form 1095-C documents employer-provided health insurance coverage for ACA compliance
• Employers with 50+ full-time employees must issue this form to workers and the IRS
• The form helps verify your compliance with health insurance requirements
• You don’t need to submit 1095 c form with your tax return but should keep it for your records
• Understanding this form helps prevent errors in your healthcare tax credits and penalties
• Employers face specific deadlines for distributing these forms to employees

What Is the 1095 C Form and Why It Matters

Form 1095-C is a key document in the world of employer health insurance. It’s important for tax filing and following the Affordable Care Act. This IRS form shows the health insurance offered by employers to their employees.

Knowing about the 1095-C form is vital for employers and employees. It helps employers meet their legal duties. It also helps employees report their health insurance on tax returns. The form lists the coverage type, premium costs, and months of eligibility.

Who Receives Form 1095-C

Form 1095-C goes to certain employees based on their job and employer size. Full-time employees at big employers (50+ full-time workers) get this form.

Also, any employee in self-insured health coverage gets a 1095-C, no matter their full-time status. This includes:

• Full-time employees (those working 30+ hours per week or 130+ hours per month)
• Part-time employees in self-insured employer coverage
• Former employees with COBRA coverage

If you work for a small employer with less than 50 full-time workers, you won’t get a 1095-C form.

How Form 1095-C Connects to Your Healthcare

Form 1095-C comes from the Affordable Care Act’s rules. It helps enforce two main parts of the act: the employer mandate and the individual mandate. Even though the federal penalty is now $0, some states may have penalties.

The form works with other health insurance reports in the ACA. Knowing how these forms differ is key for correct tax filing:

Form	Issued By	Recipients	Purpose
1095-A	Health Insurance Marketplace	Individuals with marketplace plans	Reports marketplace coverage and premium tax credits
1095-B	Insurance providers or small self-insured employers	Individuals with non-marketplace coverage	Verifies minimum essential coverage
1095-C	Applicable Large Employers (ALEs)	Full-time employees and those with self-insured coverage	Documents employer-offered coverage

These forms together help the IRS check if people have the right health coverage. They also help figure out who can get tax benefits or face penalties.

Form 1095-C: Section by Section

Form 1095-C has three main parts, each covering different health coverage aspects. Knowing these sections helps employers fill out the form right and employees understand it. Let’s look at each part of this tax form 1095-C to understand its purpose and what it includes.

Part I: Employee and Employer Information

The employer must give their Employer Identification Number (EIN). The employee’s Social Security Number (SSN) or other Taxpayer Identification Number is also needed. This section also has the employer’s contact info, including a phone number for questions.

Think of Part I as the “who’s who” section. It shows the relationship between the employer and the employee who gets health insurance.

Part II: Employee Offer and Coverage

Part II is the most complex part of the 1095C form. It details the health coverage offered to the employee month by month.

Line 14 uses offer codes to show what coverage was offered each month. Line 15 shows the employee’s monthly contribution for the cheapest self-only coverage. This is key for checking if the coverage is affordable under the ACA.

Line 16 has safe harbor codes that explain how the employer met ACA requirements. These codes show if the employee was covered, if the coverage was affordable, or if the employee wasn’t employed in some months.

Understanding Part II is key to knowing if your employer offered affordable, minimum essential coverage as the law requires.

Part III: Covered Individuals

Part III lists who was covered under the employer’s health plan. This section only shows up if the employer has a self-insured health plan.

For each covered person (including the employee and dependents), the form lists their name, SSN (or date of birth if SSN isn’t available), and which months they were covered. This info helps confirm you and your family had qualifying health coverage.

If your employer has fully-insured coverage, Part III might be blank. You might get a separate Form 1095-B from your insurance provider instead.

Understanding the Codes and Their Meanings

The codes on Form 1095-C might seem confusing at first. Series 1 codes (on Line 14) describe the coverage type, like minimum essential coverage that provides minimum value or qualifying offers.

Series 2 codes (on Line 16) explain the employee’s status or why the employer might not face penalties. For example, code 2F means the coverage offered meets affordability standards based on the federal poverty line.

These codes are important for tax filing and determining Premium Tax Credit eligibility. The IRS explains these codes in the Form 1095-C instructions. This can help clarify their meanings in your situation.

Employer Reporting Requirements for the 1095 C Form

Businesses across America must follow Form 1095-C reporting rules to stay compliant with the ACA. It’s important for employers to know their duties to avoid fines and meet federal health reporting standards. The rules change based on company size and the health coverage offered to workers.

Which Employers Must File

Not every employer needs to file Form 1095-C. Only Applicable Large Employers (ALEs) must, as defined by the Affordable Care Act. These are companies with an average of 50 or more full-time workers or full-time equivalents in the past year.

Full-time workers are those who work at least 30 hours a week or 130 hours a month. When counting your workforce, you must include both full-time workers and part-time workers combined to reach full-time equivalents.

Smaller employers with less than 50 full-time workers usually don’t have to file Form 1095-C. But, if they have self-insured health plans, they must file.

Annual Deadlines for Distribution and Filing

ALEs have two important deadlines for Form 1095-C. First, they must give forms to employees by January 31 of the next year. This helps employees with their taxes.

Second, they must send copies to the IRS by different times. Paper forms are due by February 28. Electronic submissions, needed for 250 or more forms, are due by March 31.

Meeting these deadlines is critical to avoid penalties.

Extensions and Special Circumstances

Employers facing trouble meeting deadlines can ask for an extension. For giving forms to employees, a 30-day extension is possible with a letter to the IRS.

For IRS filing deadlines, employers can file Form 8809 for a 30-day extension. Special cases like business mergers, acquisitions, or system outages might get extra time.

Companies going through big changes should talk to tax experts to figure out their duties.

Penalties for Non-Compliance

The IRS has big penalties for not following Form 1095-C rules. Employers who don’t file right or on time face penalties of $280 per form (adjusted for inflation).

Penalties go up to $570 per form if the mistake is on purpose. These fines add up fast, as they apply to each late, wrong, or missing form.

There are yearly limits on penalties, but they can be very high for big employers. The IRS might lower penalties if the employer shows they had a good reason for not following the rules. But, it’s better to plan well to avoid fines.

form 1095 c instructions

For employers, knowing how to fill out Form 1095-C is key. This form links health insurance to employee taxes. It’s important to do it right to avoid IRS penalties.

Here are the essential form 1095 c instructions for administrators and HR teams. It makes the process easier and more accurate.

Step 1: Gathering Necessary Information

Start by gathering all needed documents and data. Employee records are the base for accurate reporting. You need full names, Social Security numbers, and addresses for all full-time employees.

You also need health plan details. This includes plan start dates, coverage periods, and if employees were enrolled. Keep records of all coverage offers, even if employees declined.

Also, note any changes in employment that affected coverage. This includes new hires, terminations, or changes in job status.

Step 2: Filling Out Each Section Correctly

Part I asks for basic info about the employer and employee. Make sure company details match your EIN. Also, check that employee names match Social Security records.

Part II is the toughest part. It uses specific codes to tell the IRS important info:

• Line 14: Use the right offer code (1A-1K) for each month
• Line 15: Put the employee’s monthly premium for self-only coverage (only for certain codes)
• Line 16: Use the safe harbor code (2A-2H) if needed

For Part III, list all covered people, including dependents if you’re self-insured. Include names, SSNs (or birth dates if SSN is missing), and mark coverage for each month.

Step 3: Reviewing for Accuracy

After filling out the form, check it carefully. Common mistakes are wrong codes in Part II or not matching the actual coverage.

Make sure all employee info matches your payroll records. Even small mistakes can cause IRS notices or delays.

Compare coverage months with your benefits system to ensure accuracy. Consider having another person review the forms before you finalize them.

Step 4: Distribution and Filing Options

Employers must give Form 1095-C to employees by January 31 of the next year. The IRS filing deadline is usually late February for paper and March 31 for electronic.

Large employers with 250 or more forms must file electronically through the IRS AIR system. Smaller employers can choose paper or electronic filing.

Filing Method	Requirements	Advantages	Considerations
Paper Filing	Form 1094-C transmittal with attached 1095-Cs	Simpler for small employers	Earlier deadline; manual process
Electronic Filing	IRS AIR system registration; compatible software	Later deadline; confirmation receipts	Technical setup required
Third-Party Service	Vendor contract; data sharing agreement	Reduced administrative burden	Additional costs; data security concerns
Employee Distribution	Physical or electronic delivery with consent	Electronic delivery saves printing costs	Must maintain proof of distribution

Many employers use ACA reporting software or third-party services to help. These tools can greatly reduce errors and work load, mainly for big companies or those with complex benefits.

Remember, if you find errors after sending out the forms, you must correct them. Have a plan for handling employee questions about their forms. Many employees don’t understand what Form 1095-C is or how it affects their taxes.

What to Do with Your 1095-C as an Employee

If you’ve got a 1095-C form, it’s key to know how to handle it. This form is about your health insurance, but it’s not always clear what to do next. Knowing the right steps can prevent tax problems and help you use your health benefits wisely.

How It Affects Your Tax Return

Many think you must attach your 1095-C to your taxes. But, you usually don’t need to attach your 1095-C form to your tax return. Just keep it with your tax papers as proof.

This form shows you had health coverage, which is needed to avoid penalties.

If you bought insurance through the Marketplace, not your employer’s plan, you’ll need to file Form 8962. This form checks if you qualify for the Premium Tax Credit, which can lower your insurance costs. especially important if you’re self-employed and filing a Schedule C form, since deductions and tax credits often go hand-in-hand.

When You Should Contact Your Employer

There are times when you should talk to your employer about your 1095-C:

• If you think the form has wrong info (like your name or coverage dates)
• If you didn’t get a form when you expected to
• For any unclear codes or coverage details
• If you got a form but weren’t working there during the tax year

It’s okay to reach out to HR or benefits with questions. They must give you the right info for your taxes.

Handling Errors and Corrections

If you find mistakes on your 1095-C, act fast:

1. Write down the errors you see
2. Send a letter to your employer’s HR or benefits
3. Ask for a corrected form (they’ll need to send a new one)
4. Follow up if you don’t hear back in two weeks

Save all your messages about fixing the form. If mistakes mess up your taxes, you might need to file again with the new form.

Record-Keeping Best Practices

Keep your 1095-C with other tax papers for at least three years. This is how long the IRS usually looks at tax returns.

Make a digital copy of the form and store it safely. Keep your health insurance papers in order with your tax files. This makes it easier to find things if you need to.

Conclusion

The 1095-C form links your job’s health insurance to tax rules. It shows that employers and workers follow health coverage rules. Employers must fill it out correctly and on time to avoid problems. As a worker, this form proves you had health insurance all year. Keep it with your tax papers, but you don’t need to send it with your taxes. The form helps everyone understand their health coverage and taxes.

Need help with your taxes or have questions about your 1095-C form? Our experienced tax professionals at JC Castle Accounting are here to help you navigate complex tax situations

FAQ

what is tax form 1095-c?

Form 1095-C is a tax document from the IRS. It shows if your employer offers health insurance. It helps the IRS check if employers follow the Affordable Care Act rules.

Who receives Form 1095-C?

Full-time employees at big companies get Form 1095-C. This includes those working 30+ hours a week. Even if you didn’t take the insurance, you might get it if you work full-time at a big company.

When should I expect to receive my Form 1095-C?

Your employer must give you Form 1095-C by January 31. But, the IRS might extend this date. If you haven’t gotten it by early February, ask your employer.

Do I need to attach Form 1095-C to my tax return?

No, you don’t have to attach Form 1095-C to your taxes. But, keep it with your tax papers. It might help with health insurance credits if you bought insurance through the Marketplace.

What do the codes in Line 14 of Form 1095-C mean?

Line 14 codes tell you about the health coverage offered. For example, code 1A means you got a plan that meets ACA standards. Code 1H means no coverage was offered. These codes help with ACA rules and tax credits.

What should I do if I find an error on my Form 1095-C?

If you spot an error, tell your employer’s HR or benefits right away. Only they can fix it. Common mistakes include wrong coverage months or dependent info. Keep records of your conversation about the mistake.

How is Form 1095-C different from Forms 1095-A and 1095-B?

All three forms report health insurance. But, they come from different places. Form 1095-A is for Marketplace insurance, Form 1095-B is for small employers or insurance companies, and Form 1095-C is for big employers.

What are the penalties for employers who fail to provide Form 1095-C?

Employers who don’t give out Form 1095-C face big penalties. For 2023, it’s $290 to $580 per form, depending on when it’s filed. Big employers could face millions in fines.

How long should I keep my Form 1095-C?

Keep your Form 1095-C for at least three years after filing your taxes. Or two years after paying taxes, whichever is longer. If you claim health coverage credits, keep it longer.

What if I had multiple employers in one year? Will I receive multiple 1095-C forms?

Yes, if you worked for several big employers, you’ll get a Form 1095-C from each. Each form will show the months you were covered by that employer.

Does Form 1095-C replace my W-2?

No, Form 1095-C doesn’t replace your W-2. Your W-2 shows your wages and taxes withheld. Form 1095-C shows your health insurance. You need both for your taxes.