Form 1095-C

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Form 1095-C

What is Form 1095-C?

The Affordable Care Act (ACA) requires employers with 50 or more full-time equivalent employees to offer healthcare coverage to full-time employees or potentially face a fine. The 1095-C form is the government’s way of tracking this. 

Why do employers have to file 1095-Cs?

Starting in 2016, employers with more than 50 full-time employees were required to produce and send a second government form to employees—Form 1095-C. While the W-2’s main purpose is to communicate payment information to the IRS, the 1095-C’s function is to communicate health insurance information.

In addition, the form helps the IRS determine which employees were eligible for subsidies for individual health insurance during the year. Employees who were offered qualified coverage by their employers are not eligible for these subsidies in the months they were offered qualified coverage.

If an employee claimed a subsidy anyway, the IRS can end up recouping the subsidy from the employee. On the other hand, if an employee claims a subsidy and has an employer that did not offer qualified coverage, the employer can expect the penalty

Who has to file 1095-C forms?

It is important to keep in mind that only Applicable large employers (ALEs) are required to file these forms. In order for employers to be considered an ALE, 50 full-time workers or full-time equivalents must be in employment on average during the prior year.

  • Full-time Employee: 30+ hours per calendar week or 130+ hours per calendar month on average 
  • Full-time Equivalent (or FTE): Combination of two or more part-time workers whose hours are equivalent to a single full-time employee.

What are the 1095-C codes?

Form 1095-C contains a series of codes which indicate employee health insurance coverage. If using a benefits administration software that populates 1095-Cs, the software should populate the codes for the months they were enrolled in coverage. 

How Does Form 1095-C Relate to Form 1094-C?

Form 1094-C can be thought of as a cover sheet for all of an organization’s 1095-Cs (you must file one 1094-C per tax ID) 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.

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