What is Form 1095-C?
Form 1095-C, titled “Employer-Provided Health Insurance Offer and Coverage,” is a tax form used by applicable large employers (ALEs) in the United States to report information about the health insurance coverage offered to their employees. ALEs are employers with 50 or more full-time employees, including full-time equivalent employees, during the previous calendar year. Form 1095-C is part of the Affordable Care Act (ACA) reporting requirements, and it provides employees with the information needed to complete their individual income tax returns.
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Key Components
- Employee Information:
- The form begins with information about the employee, including their name, address, and Social Security Number (SSN).
- Employer Information:
- The employer’s name, address, and Employer Identification Number (EIN) are provided on the form.
- Employee Offer and Coverage Information:
- This section of the form includes codes to indicate the type of coverage offered to the employee each month of the calendar year. It specifies whether the employee was offered minimum essential coverage, the cost of the lowest-cost monthly premium, and whether the coverage meets minimum and affordable value.
- Covered Individuals Information:
- If the employer-sponsored health plan covered the employee or their family members, their names and Social Security Numbers, along with the months of coverage, are listed.
- Employee Required Contribution:
- This section reports the employee’s required monthly contribution for the lowest-cost monthly premium option available.
- Safe Harbor Codes:
- If the employer uses a safe harbor to determine affordability, applicable safe harbor codes are provided.
- Employer Shared Responsibility Information:
- ALEs report whether they met the employer-shared responsibility provisions for each month, indicating any applicable transition relief.
- Section 4980H Transition Relief:
- If applicable, the form includes information about any transition relief claimed by the employer under Section 4980H of the Internal Revenue Code.
- Certifications:
- The form includes a certification statement indicating that the employer has provided the necessary information to the employee and the IRS.
How to Use
- Complete Form 1095-C for Each Full-Time Employee:
- ALEs must complete a separate Form 1095-C for each full-time employee. The form provides information about the health insurance coverage offered to employees and their dependents.
- Gather Relevant Data:
- Collect the necessary information, including details about the health insurance coverage offered, employee contributions, and covered individuals.
- Determine Affordability and Minimum Value:
- Determine whether the coverage meets the ACA’s affordability and minimum value requirements. This involves calculating the employee’s required contribution for the lowest-cost monthly premium.
- Complete the Form Accurately:
- Fill out Form 1095-C accurately, using the appropriate codes and providing the necessary information for each month of the calendar year.
- Distribute Form 1095-C to Employees:
- Provide a copy of the Form to each full-time employee by the deadline. The deadline for furnishing Forms to employees is typically January 31.
- Retain Records:
- Keep copies of Form 1095-C and supporting documentation for at least three years. This documentation may be needed in case of an IRS audit.
- File Form 1095-C with the IRS:
- File Form 1095-C with the IRS and Form 1094-C (the transmittal form) by the applicable deadline. The paper filing deadline is usually February 28; electronic filing is typically March 31.
Conclusion
Form 1095-C is a critical component of ACA reporting. It provides employees with information about their employer-sponsored health coverage and assists the IRS in monitoring compliance with the ACA’s employer-shared responsibility provisions. ALEs should refer to the most recent IRS instructions for Form 1095-C for detailed guidance on completing the form and meeting reporting obligations.