What is Form 1095-C?
Form 1095-C, officially known as the Employer-Provided Health Insurance Offer and Coverage, is a critical document used by employers to report the health insurance coverage they offer to their employees. This form serves two primary purposes: it informs the IRS about the health insurance coverage provided by employers and provides employees with necessary information to complete their tax returns.
The data reported on Form 1095-C includes details about whether an employer offered health coverage to its employees, the type of coverage offered, and whether the employee accepted or declined the offer. This information is vital for administering the Employer Shared Responsibility provision under the ACA.
Who Has to File Form 1095-C?
Not all employers are required to file Form 1095-C. The obligation falls on Applicable Large Employers (ALEs), which are defined as employers with 50 or more full-time or full-time equivalent employees. These employers must report their health insurance offerings for each employee.
Additionally, Aggregated ALE Groups and ALE Members also need to comply with these reporting requirements. An Aggregated ALE Group consists of multiple related entities that together meet the threshold of having 50 or more full-time or full-time equivalent employees.
Components of Form 1095-C
Part I: Employee and Applicable Large Employer
Part I of Form 1095-C requires detailed information about both the employee and the employer. For employees, this includes their name, Social Security Number, and address. For employers, it includes their address, contact phone number, and Employer Identification Number (EIN).
Part II: Employee Offer of Coverage
Part II focuses on the health insurance coverage details offered to employees. Here, employers use Series 1 Codes to describe the type of coverage offered each month. This section also includes information on the Employee Required Contribution and any applicable Section 4980H Safe Harbor codes.
These codes help in determining whether an employer met the ACA’s requirements for offering affordable health coverage.
Part III: Covered Individuals
In Part III, employers provide information about family members and dependents who are enrolled in the health care coverage. For each covered individual, details such as name, Social Security Number, and Date of Birth are required.
Distribution and Filing Requirements
Employers must distribute Form 1095-C to their employees by January 31 of each year, with a possible 30-day extension to March 3 if needed. The deadline for filing these forms with the IRS is March 31 for electronic filing and February 28 for paper filing.
It’s important to note that if an employer is filing 250 or more forms, they are required to file electronically.
Purpose and Use of Form 1095-C
Form 1095-C plays a crucial role in administering the Employer Shared Responsibility provision under the ACA. This provision requires ALEs to offer minimum essential coverage to their full-time employees and their dependents. The form helps in determining whether an employer has met this requirement.
For employees, Form 1095-C is essential in determining their eligibility for the premium tax credit when they file their tax returns. This credit can significantly reduce the cost of health insurance premiums for eligible individuals.
Penalties for Non-Compliance
Failure to comply with the filing requirements of Form 1095-C can result in significant penalties. Employers who fail to file this form may face a penalty of $260 per employee, with a maximum penalty of $3,178,500 per year.