Employers required to comply with the ACA’s Employer Mandate must report their full-time employee’s healthcare information to the IRS annually via forms 1094-C and 1095-C, but what exactly are these forms?
It’s an important question for Applicable Large Employers (ALEs which are employers with 50 or more full-time employees and full-time equivalent employees). ALEs 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.
Every year ALE’s are required to file information returns with the IRS to identify whether they offered health coverage to their full-time employees (and their dependents) and information about the type of coverage offered. The electronic and paper filing deadlines have already passed for 2019 ACA information.
Employers must provide this information to the IRS via Forms 1094-C and 1095-C. ALEs must also provide a copy of Form 1095-C to their full-time employees, including to any person employed full-time for one or more months of the reporting year.
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 the following:
- ALE’s address, phone number, employer identification number
- Numbers of full-time and total employees
- Contact person
- How many 1095-C forms are being submitted
- Certifications of Eligibility
- Aggregated ALE Group Members
ACA Form 1095-C summarizes the information regarding healthcare offered to an ALE’s full-time employees and their dependents. The forms are provided to the IRS and copies are also provided to each full-time employee. Included on Form 1095-C is information regarding:
- Healthcare coverage offered to the employee
- Lowest-cost premium available to the employee
- Months of the year when the coverage was available
Employers that fail to submit ACA Forms 1094-C and 1095-C annually could be subject to penalties under IRC 6721/6722 in Letter 5005-A/Form 886-A. These penalties are separate from those assessed by the IRS for failing to comply with the responsibilities of the ACA’s Employer Mandate.
ACA non-compliance penalties under section IRC 4980H are still being issued via IRS Letter 226J. The tax agency is currently issuing Letter 226J penalties for the 2018 tax year but previous years are still subject to assessment since the IRS made it clear there is no statute of limitations. Additionally, Trusaic is currently supporting clients with responses to Letters 5699 for the 2019 tax year.
If your organization is unsure of how to file or is unsure of the accuracy of your ACA filings, download the 2021 ACA Essential Guide for Employers to learn best practices for meeting ACA deadlines and complying with the Employer Mandate.
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.