What Your Clients Need to Know About Form 1095-C
It’s the second year of employer reporting under the Affordable Care Act (ACA), and while the law might soon be altered or replaced, for now the process remains the same.
Which unfortunately means there’s still a lot of confusion surrounding the form known as the 1095-C, Employer-Provided Health Insurance Offer and Coverage.
With the reporting season already underway and the distribution window set to close on March 2, your business clients and their employees may have several questions regarding this notoriously tricky form.
What Exactly is a 1095-C?
Despite the large number of employees due to receive one of these forms in the early months of 2017, few of them actually know what it is. In the simplest terms, the 1095-C is a form distributed to employees and shared with the IRS. It documents and confirms that employers are providing the appropriate offer of health care – either fully insured or self-funded – to the proper employees at an affordable price.
There are three sections of the form. The first documents basic information, such as the employee’s name, address, and Social Security number. The second includes notice of whether any insurance was offered or provided, if it was affordable, and any notable exceptions. The third, only applicable if the company’s insurance is self-funded, documents who is covered on the employee’s health plan.
Who Should Get a 1095-C?
First of all, your business clients need to determine if, as an employer, they need to distribute 1095-Cs at all. If they have 50 or more full-time-equivalent employees in the preceding calendar year, then they should be offering company health coverage and will need to distribute the forms or face fines.
The employees who should be receiving Form 1095-C are as follows:
- Anyone who was a full-time employee for at least one month in 2016.
- Anyone who was an ACA full-time equivalent (worked an average of more than 30 hours a week for the length of a measurement period) whose stability period – the time during a year that an employee must be guaranteed access to coverage – falls within 2016.
- Any part-time employee who was offered and enrolled in healthcare coverage (though employers are not required by law to offer health coverage to these employees). This is only applicable for employers offering self-funded coverage.
As an employer, it’s your client’s responsibility to determine their status as an applicable large employer, as well as the status of each of their employees as ACA part- or full-time. If your clients fail to distribute forms by the deadline, even because they were simply unaware they needed to, they could face large penalties from the IRS.
What Should Employees Know?
While the responsibility of fulfilling and distributing 1095-Cs falls to employers, employees may also be confused about what they are required to do with these forms. Because of this, there are a few general pieces of information that may be helpful for your clients to share with employees receiving a 1095-C.
In most cases, those who receive a 1095-C won’t have to do anything with it besides file the paper with the rest of their tax documents. It’s not even necessary to have the document in hand to complete their taxes, so employees can go ahead and finish that process whenever they see fit.
In other cases, employees may find an error on their 1095-C – usually in the first section detailing personal information. If this happens, they should call the contact number listed on the form, directing them toward the best course of action.
If they don’t receive a 1095-C and think they should have, they should simply contact their employer. After that, it’s your client’s responsibility to figure out what happened.
There’s Also Form 1095-B
No matter what kind of coverage an employee has, if she is receiving a 1095-C, she should also get a Form 1095-B, Health Coverage. If your client’s business offers self-funded coverage, they will be responsible for distributing the 1095-B forms before March 2. But if they offer fully insured coverage, the insurance provider will be the one sending it out.
Once again, this form isn’t necessary for tax filing and doesn’t require any action. It should have generally the same information as the 1095-C, just in a slightly different format.
Anything Else to Know?
Overall, the 1095-C hasn’t changed much since last year. There are two new additional indicator codes to be used when filling out the coverage offered, but otherwise the form is the same.
If your clients struggled last year, make sure they find the appropriate resources to properly file this year and avoid penalties. Otherwise, they should simply continue with the compliance process and distribute those forms before the March 2 deadline.