Forms 1094-C and 1095-C
An Applicable Large Employer (ALE) must use Forms 1094-C and 1095-C to report the information required under sections 6055 and 6056 about offers of health coverage and enrollment in health coverage for their employees. Generally, employers with 50 or more full-time employees (including full-time equivalent employees) in the preceding calendar year are considered an ALE.
Small employers that are not ALEs and sponsor self-insured group health plans will use Forms 1094-B and 1095-B to report information about covered individuals.
How Are 1095-C Statements Sent to Employees?
- Statements may be hand delivered in any manner permitted for Form W-2. Employers should document the process used so they can validate (if needed) that the statements were provided.
- If mailed, the statement must be sent to the recipient’s last known permanent address, or if no permanent address is known, to the recipient’s temporary address.
- If the employee consents to electronic delivery, the statement may be furnished by e-mail or by informing the recipient how to access the statement.
- Note that if employees previously consented to receive Form W-2 electronically, but that consent did not “specifically identify” Form 1095-C, it would not serve as valid consent to receive Form 1095-C electronically.
- In general, there is no requirement to furnish the statement upon request for employees who terminate in the middle of the calendar year.
- Applicable large employers (ALEs) must provide Form 1095-C (or statement) to employees on or before January 31 of the calendar year following the provision of minimum essential coverage.
- ALEs must file Forms 1094/1095-C with the IRS on or before February 28 (March 31 if filed electronically) of the year following the calendar year in which it provided minimum essential coverage to an individual, unless extended by transition relief.
- This date has NOT been extended by transition relief. Because March 31 falls on a Sunday, the due date for electronic filing is April 1, 2019.
Do Employees Need the Form 1095-C to Complete Their Taxes?
- Employees need these forms to complete their taxes and the IRS anticipated this problem when it delayed the reporting requirement. Subsequently, it posted Q&As explaining the Form 1095 delay and gave limited relief, under certain conditions, to allow employees to complete their taxes without the form.
- Because this relief may be complicated, employers should direct employees with questions to the IRS web site.
Is the Employer Subject to Penalties If It Doesn’t Provide a TIN?
- A health coverage provider will not be subject to a penalty if it demonstrates that it properly solicits the TIN, but does not receive it.
What If the Employer Sponsors Other Related Accounts, Such as an HSA, FSA or HRA?
- HSA’s are not considered MEC and there is no reporting requirement.
- FSA’s that are excepted benefits are not subject to the reporting requirement.
- An FSA is an excepted benefit if the maximum benefit payable to any participant does not exceed two times the employee’s salary reduction election (or, if greater, the amount of the employee’s salary reduction election for the health FSA for the year, plus $500).
- If the employer provides more than one type of MEC via self-insuring, it only needs to report on one of the types of coverage. So, if the employer sponsors an HRA integrated with its self-insured health plan, it can report for the health plan or the HRA, but it does not need to report on both.
- However, the employer must be sure to report on employees who may have one coverage but not the other.
- HRA’s that reimburse expenses of an employee’s family members who are not covered by the employer’s health plan are subject to special transition relief and reporting rules.
Can Employers Furnish a Generic Statement to Employees Instead of an Individual Form 1095-C?
- If the employer qualifies for the qualifying offer method or the transition rule (applicable for 2015 only), it can provide a generic statement to employees instead of Form 1095-C.
- However, an individual Form 1095-C must still be prepared for each full-time employee and filed with the IRS.
Who Qualifies as a Dependent?
- An employee’s children, including the employee’s legally adopted children or children legally placed for adoption with the employee, who have not reached age 26.
- A dependent does not include the employee’s spouse, stepchildren, foster children, or a child that does not reside in the United States.
- Transition relief from the shared responsibility penalty is available for ALEs that take steps during the 2015 plan year toward offering MEC to dependents.
What Records Must Employers Maintain?
- Employers should keep copies of information returns filed with the IRS (or have the ability to reconstruct the data reported to the IRS) for at least three years from the due date of the returns.
- The records can be maintained in a paper or electronic format.
Be Careful When Counting Employees
- Note the differences for counting employees when determining whether an employer is an ALE and whether it is subject to penalties under shared responsibility.
|Criteria||ALE Status||Shared Responsibility Penalty|
|Part-time Employees||Convert to FTE||Do Not Count|
|When to Count||Preceding Calendar Year||Current Year (Monthly Measurement) or Prior Periods (Look Back)|
|Full-Time Definition||120 Hours Per Month||130 Hours Per Month|
What Are the Penalties For Noncompliance with the Reporting Requirements?
- For information regarding penalties, please click here.