Do employers have to offer health insurance? Sometimes. And if you are required to offer health insurance, you need to send a 1095-C form to all full-time employees.
If you’re unfamiliar with Form 1095-C and employer-sponsored health insurance requirements, you likely have questions like:
- What is a 1095-C form?
- How do I fill it out?
- When is Form 1095-C due?
- Where do I send it?
- What if I make a mistake?
Read on to get the answers to these questions and any other Form 1095-C inquiries you have.
What is a 1095-C form?
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, is a mandatory form that applicable large employers (ALEs) must file. The 1095-C form provides information about employer-sponsored health insurance offered to employees, their spouses, and dependents. Applicable large employers must complete Form 1095-C for each full-time employee, including those who declined coverage. Employers must send Forms 1095-C to employees and the IRS.
Under the Affordable Care Act (ACA), ALEs must offer employer-sponsored health insurance to all of their full-time employees. Applicable large employers are businesses with 50 or more full-time equivalent employees.
So, what is the purpose of Form 1095-C filing? ACA reporting requires applicable large employers to file Forms 1095-C with the IRS.
The IRS uses the forms to determine whether an applicable large employer owes money to the government. And, Forms 1095-C allow the IRS to identify which individuals were not covered by health insurance. Individuals without health insurance must pay a penalty until tax year 2019.
Submit Forms 1095-C along with Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, to the IRS.
How to fill out a 1095-C form
If you’re going to complete Forms 1095-C for each full-time employee, you need to know how to do it.
Form 1095-C is split into three parts:
- Part I: Employee | Applicable Large Employer Member (Employer)
- Part II: Employee Offer of Coverage
- Part III: Covered Individuals
Part I requests information about the employee and applicable large employer member. Record employee information like name, address, and Social Security number. And, include your name, address, and Federal Employer Identification Number (FEIN).
List information about the employee’s offer of coverage in Part II. You may also need to record information about the employee’s required contributions and special situations.
Complete Part III only if an employee enrolls in employer-sponsored, self-insured health insurance coverage. List any family members included on the plan.
Form 1095-C reporting requirements
Failing to send Forms 1095-C to your employees and the IRS can result in hefty penalties.
Each information return you fail to file correctly with the IRS costs you $270. And, each payee statement you fail to provide costs $270. The IRS may charge more, depending on circumstances.
Want to avoid hundreds, thousands, or hundreds of thousands of dollars in IRS penalties? Prevent penalties by staying on top of your Form 1095-C filing requirements.
1095-C due date
When do you need to submit Forms 1095-C to your employees and the IRS?
Send Forms 1095-C to your employees by January 31. But under a recent proposal, the IRS would grant employers an automatic 30-day extension.
If filing on paper, send Forms 1095-C and Form 1094-C to the IRS by February 28. The due date for filing electronically with the IRS is March 31.
If the due date falls on a weekend or legal holiday, the due date moves to the next business day.
If you need an extension, complete Form 8809, Application for Extension of Time to File Information Returns, before the 1095-C due date. Filing Form 8809 gets you an automatic 30-day extension.
Keep in mind that a Form 1095-C filing extension only applies to the IRS filing due date. You still need to give employees Forms 1095-C by January 31.
Where to send the ACA form
Submit Forms 1095-C to the IRS and each employee who was full time for at least one month in the tax year.
You can either file Forms 1095-C with the IRS electronically or by mail if you file less than 250 information returns. You must file electronically using the IRS’s FIRE System if you file 250 or more information returns.
Provide a copy of Form 1095-C to each employee through mail or hand delivery. If you want employees to receive electronic copies, they must consent.
Keep copies of Forms 1095-C in your records for at least three years from their due dates. You can store them in physical file cabinets, digital files on your computer, or in software.
If you don’t retain actual copies of the forms, make sure you store the information you used to create Forms 1095-C.
Issuing a corrected Form 1095-C
There are a number of mistakes employers can make on Form 1095-C. You might input an incorrect:
- Social Security number
- Employer Identification Number
- Offer of coverage
- Employee required contribution
- Covered individual
Did you make a mistake on a filed 1095-C? If so, don’t panic. Correct your mistake by issuing a corrected Form 1095-C, along with a non-authoritative copy of Form 1094-C.
To issue a corrected Form 1095-C, you must complete a brand new form. Enter an “X” in the “CORRECTED” checkbox. Submit the corrected healthcare tax form to the IRS and your employee.
If you gave a copy of the incorrect Form 1095-C to an employee but not the IRS, do not enter an “X” in the “CORRECTED” checkbox. Instead, write “CORRECTED” on a new, accurate Form 1095-C.
For more information on completing, filing, or correcting Form 1095-C, consult the IRS’s website.
If you offer health insurance, make sure to deduct employee contributions. Patriot’s online payroll software makes it easy to accurately withhold benefit contributions and taxes from employee wages. Use an easy, three-step process to run payroll, access free setup and support, and more. Get started with your self-guided demo today!
This article has been updated from its original publication date of April 24, 2019.
This is not intended as legal advice; for more information, please click here.