1094-C / 1095-C Reporting

In this guide, we will cover the basics of 1094-C/1095-C reporting, what employers need to know, and the technology solutions available to ease the burden of these new reporting requirements.

As long as the Affordable Care Act (ACA) is in place, it carries stiff compliance requirements and the potential for financial penalties. Applicable employers are required to file 1095-Cs with the IRS, and each year usually brings changes and clarifications for filing. Check out the video below for a quick quide to 1095-C Reporting.

Are You an ALE?

Applicable Large Employers (ALE) must file and distribute Forms 1094-C/1095-C each year. We’ve provided you with a calculator you can use to determine if you are an ALE. For your reference, here is how you calculate if you qualify as an ALE:

1. Calculate the number of full-time employees (FTE) per month.

Add all the FTEs for each month together to get a subtotal.

The IRS defines an FTE (Full-Time Equivalent) as someone who works 30 hours per week, or 130 hours per month.

2. Calculate the number of hours worked by non-FTEs per month.

Divide this number by 120 to determine the number of full-time equivalents. Add all months together to get a subtotal.

3. Add the two subtotals together.

4. Divide the total by 12.

5. If the total is less than 50, you are NOT an ALE. If the total is greater than 50, you ARE an ALE.

EXAMPLE:

Let’s say you had 35 FTEs for the first 6 months of the year, and 45 FTEs for the second 6 months of the year. Let’s also say you had 10 employees who worked 20 hours a week for the entire year.

    1. (60×6) + (45×6) = 630

    2. (10×20) x 12 / 120 = 20

    3. 630 + 20 = 650

    4. 650 / 12 = 54

The employer in this example would qualify as an ALE because the total is greater than 50.

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What is the 1095-C?

Beginning in 2016, employers with more than 50 full-time employees are required to produce and send a second government form to employees — Form 1095-C. While the W-2s main purpose is to communicate pay information to the IRS, the 1095-Cs function is to communicate health insurance information. Similar to the W-2, employees will also need the 1095-C to keep with their tax records.

What sections of the 1095-C do you have to fill out?

1095-C Part I: Employee and ALE Information

This part gets filled out with your information and your employee’s information. Think: Social Security Number, name, address and your federal employer identification number (FEIN).

1095-C Part II: Employee Offer and Coverage

This is the section where you detail the coverage, cost, and the reason for offering it or not.

1095-C Part III: Covered Individuals

This section is where you report details about anyone who is covered under a self-insured plan.

What is the 1095-C and its requirements?

With the introduction of the ACA and new reporting requirements, ALEs are required to provide a statement annually to each full time employee that details the employer’s health coverage offer, or, in some cases, lack of offer.

Self-funded or self-insured employers that provide minimum essential coverage are also required to provide an annual statement to employees and former employees who are covered. 

These annual statements are recorded on the 1095-C form. In order for employers to consistently describe their health coverage offers to employees, the IRS created two sets of codes which are entered into lines 14 and 16 on form 1095-C.

Code Series 1 is used for line 14 and addresses:

  • Whether an individual was offered coverage
  • The type of coverage that was offered
  • Which months the coverage was offered

Code Series 2 is used for line 16 and addresses:

  • If the individual was employed part-time or full-time
  • If the employee was enrolled in coverage
  • If the coverage was affordable, and if so, which IRS safe harbor was used to determine affordability
  • If the employer is eligible for transition relief as a contributor to a union health plan or as an employer with a non-calendar year plan
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What is the 1094-C?

The 1094-C can be thought of as a cover sheet for all of an organization’s 1095-Cs and is solely filed with the IRS and not distributed to employees. The form requires information such as the number of people employed and how many 1095-C forms are being filed. You can read more about the 1094-C on the IRS’s website.

What sections of the 1094-C do you have to fill out?

1094-C Part I: Applicable Large Employer Member (ALE Member)

This section is where you add details about your business, including address, name and your FEIN.

1094-C Part II: ALE Member Information

Here is where you’ll summarize the number of 1095-Cs you’re filing.

1094-C Part III: ALE Member Information—Monthly

This is where you denote if you provided minimum essential coverage each month.

1094-C Part IV: Other ALE Member of Aggregated ALE Group

If you are a member of a group of aggregated companies you can skip this section.

Staying Compliant with IRS Requirements

Now that you’ve identified as an Applicable Large Employer (ALE), it’s time to take a look at ALE requirements. In order to stay compliant, ALEs must:

Provide minimum essential coverage to all full-time employees.

File one Form 1094-C  to the IRS—Employers with more than one Employer Identification Number (EIN) must file 1 1094-C for every EIN.

File 1 1095-C form to the IRS for every full-time employee employed any month of the calendar year.

Distribute 1 individualized 1095-C to every full-time employee.

How to distribute 1095-Cs to employees

Acceptable distribution channels

  • Mail
  • Hand delivery
  • Email (if prior consent given)
  • Distribute to employees using BerniePortal services

Worried you’ll miss something? Distribute 1095-Cs to employees using BerniePortal’s mailing services. We’ll distribute your forms to employees for you!

File with the IRS

Once Forms 1094-C and 1095-C have been generated and reviewed, employers then need to file these forms with the IRS. You can file your forms 1094-C and 1095-C by mail or by e-filing. Here are the deadlines for distributing, filing and e-filing 1094-Cs and 1095-Cs:

IRS filing deadlines for the 2019 tax year

  • Mailing: File to IRS by February 28th, 2020
  • E-Filing: File to IRS by March 31, 2020 —Employers with 250+ employees must e-file.
  • Employee copies: Distribute by March 2, 2020.

Tips for filing 1094-Cs & 1095-Cs with the IRS via mail

Employers with fewer than 250 employees can file 1094-Cs and 1095-Cs via mail. Here are the guidelines set by the IRS when it comes to filing Forms 1094-C/1095-C via mail:

Do not fold forms (use flat mailing)

Do not paper clip or staple the forms together

If you are sending many forms, use conveniently-size packages

Note: If using convenient-sized packages, write your name, number the packages consecutively, and place Form 1094-C in package number one.

What address should I use when filing Forms 1094-C/1095-C with the IRS?

If your principal business, office/agency, or legal residence (in the case of an individual) is located in:

Alabama, Arizona, Arkansas, Connecticut, Delaware, Florida, Georgia, Kentucky, Louisiana, Maine, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Texas, Vermont, Virginia, or West Virginia…

Mailing Address to IRS:

Department of the Treasury

Internal Revenue Service Center

Austin, TX 73301

If your principal business, office/agency, or legal residence (in the case of an individual) is located in:

Alaska, California, Colorado, District of Columbia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Utah, Washington, Wisconsin, Wyoming…

Mailing Address to IRS:

Department of the Treasury

Internal Revenue Service Center

Kansas City, MO 64999

How to e-file 1094-Cs & 1095-Cs

The IRS requires employers with 250 or more employees to file electronically (e-file). Good news: BerniePortal does that too! BerniePortal uses a Transmitter Control Code that enables BerniePortal to electronically file forms directly with the IRS. This technology removes the administrative burden of 1095-C reporting saving employers time and reducing errors.

What are the 1095-C fines?

As of 2019, employers that fail to comply with 1094-C/1095-C reporting requirements may be subject to fines, including:

  • Failing to file carries a $540 fine per return
  • Failing to file electronically when required to do so carries a $270 fine per return
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Choosing a 1095-C Vendor

The last decade has witnessed a huge boom in the HR software industry and shows no sign of slowing down. With the advent of the Affordable Care Act (ACA), HR software providers have continued this expansion into the 1094-C/1095-C reporting space, each offering compliance solutions and services. Among the providers vying for this new customer base are: payroll companies, standalone vendors and HRIS providers.

Of course, these HR software vendor types all offer solutions, but not all solutions are created equal. Let’s take a look each of these three options to determine which is the best fit for your company.

Option 1: payroll companies

Payroll companies are used to filing tax forms, which leads many employers to believe that payroll is equipped to handle 1094-C/1095-C reporting. Form 1095-C, however, requires benefits information—data that is not collected by payroll providers. This means that employers must collect benefits data and submit it to the payroll provider. This collection and transfer of data is an unnecessary extra step.

Option 2: standalone vendors

Standalone vendors are vendors who exclusively provide 1095-C solutions. Because standalone vendor 1095-C solutions act independent of other systems, they must pull information from different sources, they run a much higher risk of error. The same is true of payroll companies as the information must be outsourced.

Option 3: HRIS vendors

HRIS software providers are the most logical platforms to use when filing 1094-C/1095-C forms. These providers are an obvious choice because HRIS software already hosts all information necessary to complete both 1094-Cs and 1095-Cs.

BerniePortal 1094-C/1095-C options

All employers using BerniePortal have access to 1094-C/1095-C Reporting for no additional cost. This feature compiles key benefits information and uses that information to populate your 1094-Cs and 1095-Cs. In addition to our reporting feature, BerniePortal also offers mailing and filing services. Leave 1094-C/1095-C reporting to the experts, and rest at ease that your organization is 1094-C/1095-C compliant!

1094-C / 1095-C Course

Looking for additional guidance? BernieU offers an intro to 1094-C / 1095-Cs course that will teach you everything you need to successfully prepare and file your 1094/1095-Cs for the 2019 tax year. We’ll cover everything from the history of the 1094/1095-Cs, to tactical tips and tricks for streamlining your processes and reducing errors. Sign up for free today!

Intro to 1094-C/1095-C BernieU Course

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