The IRS’s Forms 1095 For the ACA Explained
A number of changes were introduced to the health insurance marketplace with the passage of the ACA in 2010. From different reporting forms and health insurance plan requirements to the penalties imposed on employers for failing to comply with the Employer Mandate — The ACA created unique responsibilities for employers, health insurance carriers, and individuals alike.
One of the ACA’s unique requirements from a reporting perspective relates to the different Forms 1095.
Every year, Americans receive a Form 1095-A, 1095-B, 1095-C, or a combination of these forms in the mail documenting health coverage details for the previous year. The following is a description of the different types of Forms 1095 and the roles they play in complying with the ACA.
Form 1095-A
Individuals who obtain health coverage through a state or federal health exchange will receive Form 1095-A. The form indicates details pertaining to the individual as well as any others in the household that may also be receiving coverage. Health exchanges are responsible for issuing Forms 1095-A, not employers.
Form 1095-B
Forms 1095-B are distributed by health insurance carriers and employers that administer self-funded insurance plans. The Form 1095-B will contain information about the individuals covered and for which months out of the year they received coverage. In addition, individual details such as name, date of birth, and employer information are reported on Form 1095-B.
Form 1095-C
Form 1095-C is issued by Applicable Large Employers (ALEs) to their respective ACA full-time employees for an applicable reporting year. (ALEs are organizations with 50 or more full-time employees and full-time equivalent employees).
The 1095-C includes information on the lowest cost plan available to the employee, the contribution amount from the employee, and whether the health insurance plan that was offered met certain ACA plan requirements, such as Minimum Essential Coverage (MEC), Minimum Value (MV) and affordability.
Form 1095-C also provides enrollment details for the employee. Failing to furnish the 1095-C schedules to your full-time workforce can result in penalties under IRC 6722.
Employers should note that there are a number of separate deadlines associated with the 1095-C form. For example, there is a deadline for distributing 1095-C forms to employers’ full-time workforce by January 31 annually.
There is a separate deadline for employers that requires the electronic submission of the 1095-C forms to the IRS by March 31, 2022. Organizations with less than 250 1095-Cs may also choose to paper file their ACA returns to the IRS and that too, requires a separate deadline. Historically, the paper filing deadline is February 28.
The 1095-C forms submitted to the IRS should be accompanied by Form 1094-C. ACA Form 1094-C provides summary information on an applicable ALE to the IRS.
Forms 1094-C and 1095-C are used in combination with the agency’s automated Affordable Care Act Compliance Validation (ACV) System to determine whether an ALE owes a payment under the Employer Shared Responsibility Provisions under IRC Section 4980H. The IRS can also identify which ALEs had not filed or furnished information, resulting in penalties under IRC Sections 6721/6722.
Employers should note that there are a number of nuances pertaining to different IRS Forms 1095 and certain situations may arise where they may need to use a combination of forms during the reporting process. If your organization needs assistance with this, contact us to learn about our full-service, all-in-one ACA Complete solution.
For information on ACA penalty amounts, affordability percentages, important filing deadlines, steps for responding to penalty notices, and best practices for minimizing IRS penalty risk, download the ACA 101 Toolkit.
