/

Business tips

/

Dissecting IRS Form 1095 C: Your Guide to Employer Provided Health Insurance Offer

7 minute read

Understanding IRS Form 1095 C: Your ACA Employer-Provided Health Insurance Offer Guide

By

on

Welcome to our comprehensive guide to understanding the 1095-C Form and how it relates to the health insurance coverage offered by employers. In this article, we'll delve into the purpose of Form 1095-C, the reporting requirements for employers, and the significance of ACA (Affordable Care Act) reporting. Let's navigate through the complexities of employer-provided health insurance offer and coverage.

What is IRS Form 1095 C?

IRS Form 1095-C is a crucial document pertaining to employer-provided health insurance offer and coverage. It serves as a detailed record of the health insurance coverage information provided by an employer to the IRS and to full-time employees. The form is used to document an employer’s health plan and offer of coverage to employees.

Understanding the purpose of Form 1095 C

The primary purpose of Form 1095-C is to provide the IRS with information regarding the health insurance coverage offered by employers. It helps the IRS ensure compliance with the Affordable Care Act and assess the eligibility of employees for premium tax credits.

Importance of Form 1095 C for employees

For employees, Form 1095-C is crucial for determining their eligibility for premium tax credits, as it provides detailed information about the health insurance coverage offered by their employer. It also assists them in filling out their individual tax returns accurately.

IRS requirements for employers regarding Form 1095 C

Employers are mandated by the IRS to furnish Form 1095-C to full-time employees and to provide the necessary coverage information to the IRS for assessment and verification purposes.

How do Employers Handle Form 1095-C?

Employers have specific reporting requirements and deadlines for handling Form 1095-C. They are responsible for accurately reporting the health insurance coverage offered to employees and submitting the forms to the IRS.

Reporting requirements for employers

Employers are required to report the offer of health coverage to full-time employees by completing Form 1095-C with detailed information about the coverage provided, including the months of coverage and the employee's share of the lowest-cost monthly premium offered.

Issuing Form 1095-C to employees

Employers must ensure that full-time employees receive Form 1095-C, either electronically or through mail, to document the health insurance coverage offered throughout the year.

Deadlines for providing Form 1095-C to employees

There are strict deadlines for employers to provide Form 1095-C to employees. Generally, the forms must be distributed by January 31 of the following year for coverage provided in the previous calendar year (example: 2023 tax year).

What are the ACA Reporting Requirements for Form 1095-C?

Understanding the ACA reporting requirements for Form 1095-C is essential for employers to ensure compliance with the law and avoid potential penalties. The Affordable Care Act imposes specific regulations regarding the reporting of health insurance coverage offered by large employers.

Understanding the Affordable Care Act (ACA) reporting

The ACA requires applicable large employers to furnish detailed information about the health coverage offered to full-time employees, including specific code combinations on Form 1095-C that denote the type and affordability of the coverage.

Code combinations on Form 1095-C and their meanings

Form 1095-C includes various codes that convey crucial information about the health insurance coverage provided. These codes signify the type of coverage offered and the employee's eligibility for premium tax credits, helping the IRS assess compliance with the ACA.

Code Combination Description
1A, 2C Employee offered minimum essential coverage with a contribution less than or equal to 9.5% of the federal poverty line, and enrolled in the offered coverage.
1B, 2C Employee offered minimum essential coverage for themselves only, with an employee contribution amount, and enrolled in the offered coverage.
1E, 2F Employee offered minimum essential coverage for themselves and their dependents, with an employee contribution amount, and enrolled in the offered coverage that meets the affordability safe harbor based on Form W-2 wages.
1H, 2A Employee was not offered minimum essential coverage and was not an employee during the month.
2G, 2C Employee enrolled in self-insured minimum essential coverage offered by the employer that meets the affordability safe harbor based on the federal poverty line.
2G, 2D Employee enrolled in self-insured minimum essential coverage offered by the employer and was in a Limited Non-Assessment Period (LNAP) during the month.
2H, 2C Employee enrolled in minimum essential coverage offered by the employer that meets the affordability safe harbor based on the employee's rate of pay.
2H, 2D Employee enrolled in minimum essential coverage offered by the employer and was in a Limited Non-Assessment Period (LNAP) during the month.

Consequences of non-compliance with ACA reporting requirements

Failure to comply with the ACA reporting requirements and accurately completing Form 1095-C may result in potential penalties for employers. It's imperative for employers to adhere to the ACA regulations and provide accurate and timely reporting of the health insurance coverage offered to employees.

How to File Form 1095-C?

Filing Form 1095-C involves several steps and adhering to the guidelines provided by the IRS. Employers must ensure the accurate completion and timely submission of the form to comply with the reporting requirements.

Steps for filing Form 1095-C

Employers must meticulously gather and input the relevant health insurance coverage information onto Form 1095-C, including the employee's share of the lowest-cost monthly premium for self-only minimum essential coverage and other pertinent details.

Steps Description
1. Determine if you are required to file Form 1095-C. You are required to file Form 1095-C if you are an applicable large employer (ALE) who offered health insurance coverage to your employees in 2023. An ALE is an employer with 50 or more full-time employees (or the equivalent) on at least one day during the preceding calendar year.
2. Gather your information. You will need to gather the following information to complete Form 1095-C: * Your employer identification number (EIN) * The names, addresses, and dates of birth of all of your employees * The dates of coverage for each employee * The type of health insurance coverage offered to each employee (e.g., individual, family)
3. Complete Form 1095-C. You can complete Form 1095-C electronically through the IRS website or by using paper forms that can be downloaded from the IRS website.
4. File Form 1095-C. You must file Form 1095-C by the due date of your tax return. The due date for Form 1095-C is the same as the due date for Form 1094-C, which is typically April 15th.
5. Keep copies of your records. You should keep copies of your Form 1095-C records for at least six years.

IRS guidelines for electronic filing of Form 1095-C

The IRS has outlined specific guidelines for employers opting to electronically file Form 1095-C, emphasizing the importance of accurate data submission and secure transmission methods to safeguard sensitive employee information.

Common mistakes to avoid when filing Form 1095-C

Employers should be vigilant to avoid common mistakes when filing Form 1095-C, such as inaccuracies in the reported coverage information, which can lead to potential errors in employees' tax filings and compliance issues with the IRS.

What Employers Need to Know About Form 1095-C Reporting?

Employers, especially large employers subject to the ACA regulations, need to be well-versed with the requirements and implications of Form 1095-C reporting. It directly impacts their compliance with the ACA and the eligibility of employees for premium tax credits.

Requirements for large employers under the ACA

Large employers, typically those with 50 or more full-time employees, are subject to specific requirements under the ACA, including the offer and coverage reporting for full-time employees. They must ensure accurate and timely reporting of the health insurance coverage offered to comply with the law.

Offer and coverage reporting for full-time employees

Reporting on the offer and coverage provided to full-time employees is a critical aspect of Form 1095-C, as it determines the employees' eligibility for premium tax credits and assesses the adequacy and affordability of the employer-provided health insurance offer.

Impact of Form 1095-C on potential tax credits

The information provided on Form 1095-C directly influences the eligibility of employees for premium tax credits when acquiring health coverage through the Marketplace. Employers must ensure accurate reporting to avoid any discrepancies in tax credit assessments.

Conclusion

In conclusion, the significance of IRS Form 1095-C in the realm of health coverage and health insurance offer and coverage cannot be overstated. This comprehensive guide has shed light on the essential aspects of Form 1095-C, its reporting requirements, and its impact on both employers and employees.

Form 1095-C serves as the linchpin for employers to report vital health insurance coverage information to the IRS and full-time employees. It plays a pivotal role in determining employees' eligibility for premium tax credits and ensures compliance with the Affordable Care Act (ACA). Employers are not only required to offer health insurance coverage but also must file Form 1095-C to document this offer accurately.

As we step into the 2024 tax year, the importance of Form 1095-C is further underscored. Applicable large employers, those with 50 full-time employees or more, must adhere to strict ACA reporting requirements. They are mandated to provide Form 1095-C to their full-time employees, either electronically or through the mail. Filing Form 1095-C accurately and on time is not merely a compliance obligation; it is essential to avoid potential penalties and legal consequences.

The codes on Form 1095-C hold the key to understanding the intricacies of health coverage information. These 16 codes are used by applicable large employers to report health insurance coverage offered to full-time employees and their dependents. Accurate code reporting is crucial to the IRS's assessment of ACA compliance.

In addition to Form 1095-C, employers may also need to navigate Form 1095-B and Form 1095-A, depending on their specific circumstances. Understanding these forms and their implications is part and parcel of ACA reporting.

To ensure compliance with the ACA and provide employees with the necessary information for their tax filings, employers must offer health insurance coverage and diligently file Form 1095-C. Failure to do so could result in penalties and complications when filing taxes.

As employers work to fulfill their ACA reporting obligations, it's advisable to visit the IRS website for comprehensive guidance and resources. The IRS provides valuable insights and instructions for completing and submitting these forms accurately.

How can Taxfyle help?

Finding an accountant to file your taxes is a big decision. Luckily, you don't have to handle the search on your own. 

At Taxfyle, we connect individuals and small businesses with licensed, experienced CPAs or EAs in the US. We handle the hard part of finding the right tax professional by matching you with a Pro who has the right experience to meet your unique needs and will handle filing taxes for you.

Get started with Taxfyle today, and see how filing taxes can be simplified. 

Legal Disclaimer

Tickmark, Inc. and its affiliates do not provide legal, tax or accounting advice. The information provided on this website does not, and is not intended to, constitute legal, tax or accounting advice or recommendations. All information prepared on this site is for informational purposes only, and should not be relied on for legal, tax or accounting advice. You should consult your own legal, tax or accounting advisors before engaging in any transaction. The content on this website is provided “as is;” no representations are made that the content is error-free.

Was this post helpful?
Yes, thanks!
Not really
Thank you for your feedback
Oops! Something went wrong while submitting the form.
Did you know business owners can spend over 100 hours filing taxes?
Yes
No
Is this article answering your questions?
Yes
No
Are you filing your own taxes?
Yes
No
How is your work-life balance?
Good
Bad
Do you do your own bookkeeping?
Yes
No
Is your firm falling behind during the busy season?
Yes
No
Did you know business owners can spend over 100 hours filing taxes?
Yes
No
Is this article answering your questions?
Yes
No
Do you do your own bookkeeping?
Yes
No
Are you filing your own taxes?
Yes
No
How is your work-life balance?
Good
Bad
Is your firm falling behind during the busy season?
Yes
No
Did you know you can save your business money by paying less in taxes?
Yes
No
Is this article answering your questions?
Yes
No
Are you missing out on potential tax credits and deductions?
Yes
No
I don't know
How is your work-life balance?
Good
Bad
Do you do your own bookkeeping?
Yes
No
Is your firm falling behind during the busy season?
Yes
No
Did you know you can save your business money by paying less in taxes?
Yes
No
Are you missing out on potential tax credits and deductions?
Yes
No
I don't know
How is your work-life balance?
Good
Bad
Is your firm falling behind during the busy season?
Yes
No
Do you do your own bookkeeping?
Yes
No
Is this article answering your questions?
Yes
No

published

November 28, 2023

in

Steven de la Fe, CPA

Read

by this author

Share this article
>