The form that applicable large employers (ALE) use yearly to report employee healthcare coverage to both their employees and to the federal government is called IRS Form 1095-C: Employer-Provided Health Insurance Offer and Coverage. Form 1095-C details how minimum essential coverage requirements have been met by the company, including the requirements mandated by the Affordable Care Act (ACA).
Employees do not need to submit this form to the IRS; instead, they should retain it in their personal records. Find out more about the function of Form 1095-C, what type of companies must file it, and how the form is structured.
Definition of Form 1095-C
Applicable large employers are required to file Form 1095-C: Employer-Provided Health Insurance Offer and Coverage with the IRS on an annual basis. The form details the minimum required employee health care coverage as mandated by the Affordable Care Act.
Copies of Form 1095-C are issued to both the federal government and to employees.
Individual taxpayers are not required to fill out the form or file it with their tax returns. That responsibility lies with the employer. As far as employees are concerned, Form 1095-C is a reference document that should be kept for their personal records. The information provided by Form 1095-C helps determine a taxpayer's eligibility for credits, such as the premium tax credit.
- Alternate name: Form 1095-C
Who Needs To File Form 1095-C?
Form 1095-C must be completed and filed by any ALE—an organization that employs at least 50 full-time individuals—and can be either one entity or a group of related entities. ALEs must file and furnish Form 1095-C for every individual employed by them for at least one month out of the calendar year, and the form must report health insurance coverage information for all 12 months of the year.
What Coverage Does Form 1095-C Confirm?
The 2010 ACA includes employer-shared responsibility provisions, also known as the employer mandate. The employer mandate requires ALEs to provide affordable minimum essential health care coverage to all full-time employees.
To qualify as minimum essential coverage, employer insurance plans must cover at least 60% of the total allowed cost of benefits expected to be incurred under the plan.
To qualify as affordable, employer plans must require the employee to contribute no more than 9.5% (as adjusted) of that employee’s household income. Alternatively, because it is often difficult for organizations to determine their employees’ household income, employers can calculate affordability by using Form W-2 wages, the employee’s rate of pay, or the current federal poverty level.
How Is Form 1095-C Structured?
Form 1095-C consists of three parts.
Part I comprises the employee’s personal information, including their name, address, and Social Security number. Part I also reports the ALE’s information, including identifying details and contact information.
Part II of Form 1095-C provides the employee’s age and the details of monthly coverage provided to the employee. Part II also reports employee contribution totals.
Part III of Form 1095-C is only completed if the ALE provides a self-insured plan. This means the employer itself collects premiums from enrollees and is responsible for paying employees’ and their dependents’ medical claims. Part III provides identifying information for each insured employee and lists the months of coverage.
Other Relevant Forms
In the event that the ALE only completes Parts I and II, the employee may also receive IRS Form 1095-B: “Health Coverage.”
Form 1095-B is used when employees are covered by minimum essential coverage and are thus not liable for the individual shared responsibility payment. It contains the employee’s personal information, details about the employer-sponsored coverage, issuer information, and details about covered individuals.
IRS Form 1095-A is issued to individuals who obtain healthcare through a health insurance marketplace carrier. Like the 1095-C, Form 1095-A is not meant for filing but should be kept with personal records. Form 1095-A details recipient and coverage information.
- IRS Form 1095-C must be used by large employers to report employee health care coverage.
- This form must confirm minimum essential coverage and affordability.
- Employers are responsible for furnishing Form 1095-C to the IRS and each employee.
- Employees need not file 1095-C with their taxes but should retain the form for their records.
Frequently Asked Questions (FAQs)
Does form 1095-C need to be included with my tax return?
No, the form is used to help you prepare portions of your taxes related to health insurance coverage and certain credits, but individual employees do not need to report this form to the IRS.
How do I know if I need a 1095-C form?
If you are employed by a company with over 50 employees (an "applicable large employer" or ALE) and offered self-insured health coverage, your employer is required to furnish you with a copy of this form that they report to the IRS. This does not apply to everyone. Many people will receive form 1095-A or form 1095-B instead, depending on their source of healthcare coverage.
When can I expect to receive my 1095-C form in the mail?
It should arrive by January 31. If you still haven't received it by February 15, it is advised to contact your employer or HR department.