What You Need to Know About ACA Tax Forms

The IRS added the ACA tax Form 1095 in 2015. Employers use Form 1095 to report on employee health coverage. If you offer health insurance at your small business, you may need to file Form 1095. The number of employees you have and the coverage you offer determine if you file Form 1095.

The ACA sets employer standards for offering employees health insurance. First, let’s look at how your business fits into the ACA.

The Affordable Care Act

The ACA determines your employer size based on how many employees work for you. The ACA considers you a small employer if you have 50 or fewer full-time employees. You are not required to offer health coverage to employees, but you can choose to do so.

Small employers can buy coverage:

The ACA considers you a large employer if you have more than 50 full-time employees. Large employers must provide employees with affordable health insurance. Large employers must also report coverage information to the IRS.

Who fills out Form 1095?

The provider of the health coverage fills out the ACA tax forms. This means the person or entity paying for the coverage files Form 1095. If you are a small employer with a self-insured plan, you will fill out Form 1095. You file the form because you pay all your employees’ medical bills, not just a premium.

You will see three variations of Form 1095 (A, B, or C). These letters represent who fills out the form.

  • Form 1095-A is filed by health insurance providers.
  • Form 1095-B is filed by self-insured small employers.
  • Form 1095-C is filed by large employers.

You do not need to fill out Form 1095 if you are a small employer who offers fully-insured plans. With fully-insured plans, you pay the insurance company a premium. The health insurance company then pays employee health care claims. The insurance company will file Form 1095-A. Your covered employees and the IRS should receive Form 1095 from the insurance provider.

You also do not fill out Form 1095 if you have coverage through the SHOP Marketplace. The insurance provider within the SHOP Marketplace pays your employee health care claims. The insurance provider fills out and sends Form 1095-A.

As a small employer, you must file Form 1095 if you provide self-insured coverage. This means you operate under your own health care plan. You pay each employee’s medical bills, not just a premium. You will fill out and send Form 1095-B to covered employees and the IRS.

All large employers must file Form 1095-C. Large employers will file the form for every full-time employee.

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Employer requirements for ACA tax forms

Form 1094 gives a summary of Form 1095. Form 1094 provides information about your plan and coverage options. It does not give information about each employee individually. Small employers with self-insured plans will use Form 1094-B as a transmittal form.

You are responsible for filling out and sending Form 1095. You must provide every covered employee with the form. You must also provide the IRS with Form 1095 for each covered employee.

To fill out Form 1095, you need this information from every covered employee:

  • Full name
  • Mailing address
  • Date of birth
  • Tax ID number (usually Social Security number)
  • The health care plan
  • Months covered by the plan

The IRS made other tax filing changes for large employers. Small employers do not have to worry about changes to large employer filing procedures.

Why Form 1095 matters to small employers

You must return Form 1095 if you provide self-insured coverage to your employees. If you file an incorrect or late form, you could receive penalties from the IRS.

The IRS may not penalize you for incorrect forms if you prove you have made good faith efforts to comply with reporting rules. This means you have to convince the IRS that you did not purposely return an incorrect form. ACA tax forms returned late do not meet the good-faith requirements.

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This article has been updated from its original publication date of December 2, 2015.

This is not intended as legal advice; for more information, please click here.

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