Form 1095-C is a tax form many larger employers have to send to their full-time employees, detailing the health insurance coverage offered to them. This document confirms whether an employee was offered health insurance and provides information about the coverage itself, including the months it was available. Employees need this form to verify their health coverage status when filing their tax returns. Employers must ensure accurate and timely filing to comply with regulations and avoid potential penalties.
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What Is Form 1095-C Used For?
Form 1095-C is an essential document for employees and employers alike, serving as a key component in the administration of health insurance coverage under the Affordable Care Act (ACA). This form is primarily used by applicable large employers (ALEs), defined as those with 50 or more full-time employees, to report information about the health insurance coverage offered to their employees.
The form provides details about the type of coverage offered, the months during which the coverage was available and the cost of the cheapest monthly premium for self-only coverage. Affected employees will use this form when filing their taxes to determine their eligibility for the Premium Tax Credit.
Employers are required to furnish Form 1095-C to each full-time employee and also file it with the IRS. This requirement ensures that both the employee and the IRS have a clear record of the health insurance coverage offered. By providing this form, employers demonstrate compliance with the ACA’s employer mandate, which requires them to offer affordable health insurance that meets minimum essential coverage standards.
For employees, Form 1095-C is a valuable resource during tax season. It helps them verify whether they had health insurance coverage throughout the year and whether the coverage met the ACA’s standards. While employees do not need to attach Form 1095-C to their tax returns, they should keep it for their records. The information on the form can assist in determining eligibility for the Premium Tax Credit, which can lower the cost of health insurance purchased through the Health Insurance Marketplace.
When filing their tax returns, employers use the information provided on Form 1095-C to confirm their health coverage status and to reconcile any advance payments of the Premium Tax Credit they may have received. Accurate reporting on this form helps prevent discrepancies that could lead to penalties or the need to repay credits. Therefore, employees are advised to review the form carefully and ensure that all information is correct before filing their taxes.
What’s Included in Form 1095-C?
The first section of Form 1095-C includes basic information about both the employer and the employee. This section lists the employer’s name, address, and Employer Identification Number (EIN), as well as the employee’s name, address, and Social Security Number. This information is needed to identify the parties involved and ensure that the form is tied to the right individuals and organizations.
A significant portion of Form 1095-C is dedicated to detailing the health coverage offered to the employee. This includes the type of coverage provided, such as whether it was self-only or family coverage, and the months during which the coverage was available. The form also specifies whether coverage met ACA’s minimum essential coverage requirements.
Another critical component of Form 1095-C is the section that outlines the employee’s share of the monthly premium for the lowest-cost, self-only minimum essential coverage. This information enables employees to understand their financial responsibility regarding their health insurance. It also helps in determining eligibility for the premium tax credit. This credit can provide significant financial assistance to those who qualify based on their income and coverage costs.
Form 1095-C also includes a section with codes that indicate any safe harbor provisions or other relief that the employer may have used. These codes can explain why certain offers of coverage were made. For example, they might indicate that the employer was eligible for transitional relief or that the coverage was affordable based on specific criteria.
Who Has To File Form 1095-C?
Large employers, specifically those with 50 or more full-time employees, are required to file Form 1095-C. This mandate is part of the ACA’s Employer Shared Responsibility provisions, which aim to ensure that large employers offer adequate health insurance coverage to their employees. The form must be provided to each full-time employee and filed with the IRS.
Employers have to meet specific deadlines for filing Form 1095-C. Typically, the form must be provided to employees by January 31 and filed with the IRS by February 28 if filing on paper, or March 31 if filing electronically. Failure to meet these deadlines can result in significant penalties.
Penalties for Not Filing Form 1095-C
The IRS imposes fines on businesses that either fail to file the form altogether or submit it with incorrect information. As of 2025, the penalty for not filing can be as high as $310 per form, with a total maximum of over $3 million per year for large employers. These penalties can quickly add up, especially for businesses with a large workforce, motivating employers to ensure accurate and timely filing.
Bottom Line
Form 1095-C plays a central role in increasing transparency and accountability in employer-provided health insurance. Employees need the form to file their tax returns, and employers are required to file it timely and completely or face possible penalties. By understanding who files it and who receives it, both employers and employees can better navigate their responsibilities and benefits under the ACA, ensuring compliance and informed decision-making regarding health coverage.
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