Form 1095-C

What is Form 1095-C?

Form 1095-C is a key IRS document that Applicable Large Employers (ALEs) use to report the health insurance coverage they offer to full-time employees.

It’s all about ensuring compliance with the Affordable Care Act (ACA) while keeping both employees and the IRS in the loop.

This form serves two important roles.
1. For employees, it provides details about the health coverage they were offered, which can come in handy during tax season.

2. For the IRS, it helps verify that employers meet ACA requirements and determines if employees qualify for premium tax credits.

ALEs are required to file Form 1095-C for each full-time employee, covering every month they worked—even if they were employed for only part of the year.

Let’s dig deeper.

Who is Required to File Form 1095-C?

If you’re a business owner with 50 or more full-time employees (or full-time equivalents), you’re classified as an Applicable Large Employer (ALE), and that means you’ll need to file Form 1095-C.

This form is required for all full-time employees who worked at least one month during the calendar year. It’s crucial to report health insurance coverage details for every month of the year, even if an employee was only with the company for part of it.

Now, if your business has fewer than 50 full-time employees, you’re not considered an ALE and therefore aren’t required to file Form 1095-C.

Also, part-time employees and contractors generally won’t receive this form. However, as an ALE, you must file for all full-time employees—whether or not you offer them health coverage, or if they accept it.

It’s worth noting that Form 1095-C is also used to determine eligibility for the Premium Tax Credit. This credit helps individuals and families afford health insurance premiums through the Health Insurance Marketplace, making it a key part of the process for those looking to lower their healthcare costs.

When is Form 1095-C Due in 2025?

For the 2024 tax year, it’s important to keep track of key deadlines for filing Form 1095-C. If you’re filing paper Forms 1094-C and 1095-C with the IRS, the deadline is February 28, 2025.

However, if you prefer to file electronically (and it’s mandatory if you’re submitting 10 or more forms), you have a bit more time, with the final date being March 31, 2025.

Additionally, don’t forget that you need to provide a copy of Form 1095-C to your employees by January 31, 2025. Staying on top of these deadlines is essential to avoid any penalties for late submissions or for failing to comply with the Affordable Care Act (ACA) requirements.

What Information Does Form 1095-C Contain?

Employee Information
This section includes:

• The employee’s full name
• Social Security Number (SSN)
• Address

Employer Information
Here, you’ll find details about the employer, including:

• Name of the employer
• Employer Identification Number (EIN)
• Address
• Contact phone number

Health Insurance Coverage Details
This part gets into the specifics of the coverage offered:

• The type of coverage available
• The months when coverage was offered
• The cost of the lowest monthly premium for self-only coverage
• Codes that explain the type of coverage and the employee’s eligibility

Covered Individuals (If Applicable)
If family members are covered under the plan, this section lists:

• Their names
• Dates of birth (if SSNs aren’t available)
• SSNs or tax IDs
• The months they were covered

How to Fill Out Form 1095-C?

Filling out Form 1095-C may seem daunting, but breaking it down step by step can make the process manageable.

Here’s what you need to do:

Part I: Employee and Employer Information

Employee Information: Fill in the employee’s name, Social Security Number (SSN), and address.
Employer Information: Enter the employer’s name, Employer Identification Number (EIN), address, and contact phone number.

Part II: Employee Offer and Coverage

• Line 14 (Offer of Coverage): Choose the correct code to describe the type of coverage offered to the employee for each month.
• Line 15 (Employee Required Contribution): Specify the amount the employee would pay for the lowest-cost self-only minimum essential coverage.
• Line 16 (Section 4980H Safe Harbor and Other Relief): Select the applicable code indicating any safe harbor or relief provisions for each month.

Part III: Covered Individuals (If Self-Insured)

Covered Individuals: If the employer’s plan is self-insured, list the names, SSNs (or dates of birth if SSNs aren’t available), and the months of coverage for the employee and any dependents covered under the plan.

Additional Tips

• Accuracy: Double-check all details, especially SSNs, coverage codes, and dollar amounts, to avoid errors.
• Deadlines: Distribute the form to employees by January 31, 2025, and file with the IRS by February 28, 2025 (or March 31, 2025, if filing electronically).
• Resources: Consult the official IRS instructions for Forms 1094-C and 1095-C for detailed guidance.

Completing and submitting Form 1095-C accurately and on time is critical for Affordable Care Act compliance and helps you avoid costly penalties.

What Are the Penalties for Failing Form 1095-C?

Missing deadlines or providing incomplete or incorrect Form 1095-C filings can lead to hefty IRS penalties under Sections 6721 and 6722. These penalties apply to late filings, inaccuracies, or failing to furnish forms to employees. Here’s what you need to know:

Standard Penalties for 2025

• Failure to File: $330 per form, with an annual maximum of $3,987,000 for large businesses.
• Failure to Furnish: $330 per form, also capped at $3,987,000 annually.
• Incorrect Information: $330 per form, up to the same $3,987,000 limit.
• Intentional Neglect: $660 per form, with no maximum cap—this can add up quickly.

Reduced Penalties for Timely Corrections

• Filing Within 30 Days: $60 per form, with a maximum penalty of $664,500.
• Filing by August 1: $130 per form, capped at $1,993,500.

Small Business Penalties (for businesses with gross receipts of $5 million or less)

• Failure to File/Furnish After August 1: $330 per form, but the annual maximum is reduced to $1,329,000.
• Intentional Neglect: $660 per form, again with no cap.

How to Avoid or Reduce Penalties

• Correct Errors Promptly: Filing or fixing mistakes early can drastically lower penalties.
• Adopt Compliance Practices: Establish systems to ensure timely and accurate submissions.
• Stay Updated: Regularly review ACA regulations and IRS deadlines to remain compliant.

By filing proactively and double-checking all information, you can protect your business from unnecessary penalties and save thousands in avoidable costs.

What is the difference between Form 1095-C and Form 1094-C?

While both Form 1095-C and Form 1094-C are crucial for ACA compliance, they serve distinct but complementary purposes.

• Form 1095-C: This form is all about the details. It provides information on the health insurance coverage offered by Applicable Large Employers (ALEs) to their full-time employees. It outlines specifics like coverage availability, costs, and eligibility, and it’s sent to both employees and the IRS.
• Form 1094-C: Think of this form as the “cover sheet” for your submission. It’s used to transmit multiple 1095-C forms to the IRS and summarizes key employer-level information, such as the total number of forms filed and basic details about the ALE.

In simple terms, Form 1095-C focuses on the employee’s health coverage, while Form 1094-C provides an overview from the employer’s perspective. Together, they help the IRS ensure compliance with ACA requirements.