2 minute read:
“What exactly is Form 1095-C?” It’s a question that employers often ask when they’re first introduced to the responsibilities of the ACA’s Employer Mandate. In this post, we will be answering some of the most common questions pertaining to Form 1095-C, and to kick things off we’ll start with the obvious:
Q: What is Form 1095-C?
A: Form 1095-C is a schedule that summarizes the information regarding healthcare offered to a particular Applicable Large Employer’s employee. Forms 1095-C are provided to both the IRS and to the full-time employee. Form 1095-C includes information on the healthcare coverage offered to the employee, the lowest-cost premium available to the employee, the months of the years when the coverage was available, and whether or not the employee enrolled.
Q: Who has to file IRS Form 1095-C?
A: Applicable Large Employers (ALEs), employers with 50 or more full-time employees and full-time-equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee, or be subject to Internal Revenue Code (IRC) Section 4980H penalties.
These types of employers must file Forms 1095-C with the IRS and provide them to their full-time employees annually.
Q: What are the Code Combinations on IRS Form 1095-C?
A: There are a number of Code Combinations on Form 1095-C, and the correct Code Combinations must be accurately reported on lines 14 and 16. For a breakdown and explanation of the codes, their meanings, and when to use them, read our post on the 1095-C codes. For the 2020 tax year, new codes have been released due to the COVID-19 pandemic.
Q: Should employers file Forms 1095-C?
A: Applicable Large Employers must file Forms 1095-C for their full-time employees if they do not want to be subject to potential penalties from the IRS. The tax agency is currently issuing ACA non-compliance penalties for the 2018 year via Letter 5699. Employers that fail to file Forms 1095-C could also be subject to penalties under IRC 6721 and 6722. Employers may also be subject to penalties for failing to file Forms 1095-C for prior years.
Q: Are there any other forms employers need to file with Form 1095-C?
A: Form 1095-C must be filed with Form 1094-C. Form 1094-C summarizes the ALE’s 1095-C information returns as well as details pertaining to the organization, such as EIN, address, point of contact, and certifications of eligibility regarding the health insurance offered for a particular year. Specifically, Form 1094-C includes, among other information, the ALE’s address, phone number, employer identification number, the total number of employees, a person to contact, the total number of 1095-C forms being filed, and any certifications of eligibility. Form 1094-C also contains a “Minimum Essential Coverage Indicator,” where employers must certify that they did or did not provide such coverage to their employees in compliance with the ACA’s Employer Mandate.
Q: What are the filing deadlines and extensions associated with Form 1095-C?
A: Each year, ALEs must furnish their Forms 1095-C to their employees by January 31. Typically, the IRS issues an extension for this but it’s not a guarantee. In addition, employers that choose to paper file Forms 1094-C and 1095-C, provided that they are filing less than 250 forms, must do so by February 28. Employers that choose to electronically file must do so by March 31.
If employers do not meet these deadlines, they must file for an extension ahead of time and substantiate why they are unable to meet the deadline. Employers that fail to meet these deadlines could face significant financial penalties from the IRS.
If you have additional questions regarding 1095-C or anything relating to ACA compliance, contact us to learn about how ACA Complete can help your organization fully comply with the responsibilities of the healthcare law.
