Form 1095-C: Definition, Uses, and Tax Filing Requirements

August 24, 2024 4 min read Taxation Government Regulations Form 1095-C Tax Filing Health Coverage Applicable Large Employer IRS

Comprehensive overview of IRS Form 1095-C, detailing its definition, primary uses, and specific tax filing requirements for Applicable Large Employers (ALEs) and employees.

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Form 1095-C is a tax form used to report information about employer-provided health coverage. This form is especially relevant for employees of Applicable Large Employers (ALEs), as it provides details on the health insurance offered to them. ALEs are employers with 50 or more full-time employees, including full-time equivalent employees, who are mandated to follow the provisions of the Affordable Care Act (ACA).

Definition

Form 1095-C serves two primary purposes:

Informing Employees: It provides employees with data about the health care coverage offered to them, which they may need to complete their individual tax returns.
Reporting to the IRS: It helps the IRS determine compliance with the ACA employer mandate and ensures that ALEs are offering adequate health insurance coverage to their full-time employees.

Main Sections of Form 1095-C

Part I: Employee and Employer Information

This section identifies the employee and the employer, providing crucial details such as:

The employee’s name, Social Security Number (SSN), and address.
The employer’s name, Employer Identification Number (EIN), and address.

Part II: Offer of Coverage

Part II details the specifics of the health coverage offered to the employee, including:

Line 14: The type of coverage offered.
Line 15: The employee’s required monthly contribution.
Line 16: The employer’s coverage offer based on the Employee’s Work Schedule (e.g., full-time, part-time).

Part III: Covered Individuals

This section lists individuals covered under the employee’s health plan, including dependents, and provides the months they were covered.

Tax Filing Requirements for Form 1095-C

For Employees

Employees should retain Form 1095-C for their records as it contains essential information required to complete their tax returns. Employees do not need to attach the form to their tax return but may need to refer to it when answering questions regarding health coverage.

For Employers

ALEs must provide a copy of Form 1095-C to each full-time employee and file copies with the IRS.

Deadlines: Employers must furnish employees with their Form 1095-C by January 31st of the following year. The IRS filing deadline is March 31st if filing electronically, or February 28th if filing by paper.

Filing Methods

Employers can file Form 1095-C electronically using the IRS AIR System (Affordable Care Act Information Returns) or submit paper forms if fewer than 250 returns are filed.

Special Considerations

Penalties and Compliance

Failing to file Form 1095-C or providing incorrect information can result in significant penalties under sections 6721 (failure to file correct information returns) and 6722 (failure to furnish correct payee statements) of the Internal Revenue Code.

Corrections and Amendments

If errors are discovered on Form 1095-C after filing, employers must file corrected forms with the IRS and provide corrected copies to affected employees.

Examples and Applicability

Example Scenario

Employee John Doe at XYZ Corp.:

XYZ Corp. is an ALE with 150 employees. John, a full-time employee, received his 1095-C stating that he was offered Minimum Essential Coverage (MEC) and Minimum Value (MV) health insurance for all 12 months of the year. John checks his form to ensure his info is correct before using it for his personal tax filing.

Form 1095-B: Form 1095-B reports health coverage information for individuals enrolled in a Qualified Health Plan (QHP), typically issued by health insurance providers.
Affordable Care Act (ACA): The ACA mandates that ALEs offer health insurance coverage to full-time employees and establishes the groundwork for Form 1095-C reporting requirements.

FAQs

What Should I Do If I Did Not Receive Form 1095-C?

If you believe you should have received Form 1095-C but did not, contact your employer’s HR department to obtain a copy.

Is Form 1095-C Necessary for Filing My Taxes?

While not required to be attached to your tax return, Form 1095-C contains vital information that may be needed to complete your tax filing accurately.

References

Internal Revenue Service. (n.d.). Understanding Your 1095-C. Retrieved from IRS.gov
U.S. Department of the Treasury. (n.d.). The Affordable Care Act: Employer Responsibility Provisions. Retrieved from Treasury.gov

Summary

Form 1095-C plays a crucial role in ensuring compliance with ACA regulations, providing necessary health coverage information to employees and the IRS. ALEs must adhere to specific filing requirements to avoid penalties, and employees should keep their forms for reference during tax filing. Understanding the structure and use of Form 1095-C is essential for effectively managing tax documentation related to employer-provided health coverage.