1095-C Filing

Healthcare reform is a central topic of discussion, so understanding the specifics of the Affordable Care Act (ACA) is essential. Form 1095-C plays a large role in this discussion and is used to show the health insurance offers and coverage provided to employees. As Applicable Large Employers (ALEs) navigate the intricate web of ACA mandates, clarity surrounding Form 1095-C's purpose, obligations, filing methods, and potential penalties is paramount.

What is Form 1095-C: Employer-provided Health Insurance Offer and Coverage?

Form 1095‑C is the annual statement that Applicable Large Employers (ALEs)—those averaging 50 or more full‑time and full‑time‑equivalent employees—must deliver to each full‑time worker. It spells out whether the employer offered affordable, minimum‑essential health coverage for every month of the calendar year and lists the employees, spouses, and dependents who were eligible or enrolled.

Although employees do not submit Form 1095‑C to the IRS with their tax return, it serves three important purposes:

• Proof of Offer — Demonstrates that the employer satisfied its ACA “employer‑shared responsibility” mandate.
• Premium Tax Credit (PTC) Check — Helps the IRS confirm whether the employee (or a dependent) can legally claim a Marketplace premium subsidy.
• Personal Records — Gives employees documentation of the coverage that was available or elected for their own files and future inquiries.

Your 1095-C Form filing obligations explained

The Form 1095-C is a tax form tied to the obligations set forth by the ACA for ALEs. An ALE is an employer that typically has 50 or more full-time and full-time equivalent employees.

ALEs are required to report the health insurance offers and coverage provided to their full-time employees. The 1095-C Form serves as this reporting mechanism. They must also distribute a copy of the form to each eligible employee and file a copy with the IRS by the appropriate deadlines.

The data within the Form 1095-C filing assists the IRS in determining whether the employer has met their responsibility to offer qualifying health coverage. In essence, the filing obligations associated with the 1095-C Form ensure transparency and compliance with the ACA's employer mandates.

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What are the Form 1095-C filing methods?

Form 1095-C can be filed using two primary methods: paper filing or electronic filing.

For employers submitting fewer than 10 forms, paper filing with the IRS is an option. Employers must ensure that they are using the appropriate IRS address designated for their location. However, employers issuing 10 or more Form 1095-Cs in any given year are mandated to use electronic filing through the IRS's ACA Information Returns (AIR) system.

The AIR system is designed specifically for e-filing and to enhance the efficiency of data transmission. Employers must become authorized transmitters and use a special format to send the data. This can be an arduous process, so it's recommended to use an IRS-authorized transmitter to make the process simple and easy.

It's important to note that regardless of the filing method chosen, employers must still provide a copy of Form 1095-C to each eligible full-time employee. The forms can be delivered by mail or in-person, or, if the employee has consented, by electronic delivery methods.

What information is included in a Form 1095-C filing?

Form 1095‑C offers the IRS a month‑by‑month look at the health‑coverage offer made to each full‑time employee—data the agency uses to enforce employer‑shared‑responsibility penalties and to confirm Premium Tax Credit eligibility. The return is divided into three parts:

• Part I – Employee & Employer Information (Lines 1‑13)
  Identifies both parties by name, Taxpayer Identification Number (TIN), and address, and lists a contact phone number for questions.
• Part II – Employee Offer of Coverage
  Shows—in IRS code format—the coverage offered for every calendar month:
  • Line 14 – Offer of Coverage Series 1 codes
  • Line 15 – Employee’s required contribution for the lowest‑cost self‑only plan
  • Line 16 – Section 4980H Safe Harbor or other relief Series 2 codes
  • Line 17 – ZIP code used for affordability testing (if applicable)

  Tip: Before completing Line 15, confirm the annual affordability percentage—updated every tax year—to avoid inadvertent penalty exposure.

• Part III – Covered Individuals (Lines 18‑30)
  Lists each person (employee, spouse, dependents) who actually enrolled in the employer’s self‑insured plan, including their TINs or dates of birth and the months they were covered. Employers that offer only fully insured coverage leave this section blank because the carrier reports enrollment on Form 1095‑B.

Collectively, these data points enable the IRS to confirm an employer’s adherence to the ACA mandates and to verify whether an employee can lawfully claim a Marketplace Premium Tax Credit.

Best practice: Keep payroll and benefits records current, validate TINs through the SSA’s BSO service, and test‑file through AIR early. Early, accurate submissions reduce AIR rejections—and the risk of late‑filing penalties.

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What are the Form 1095-C filing deadlines?

Form 1095-C has specific deadlines that employers must adhere to, ensuring timely compliance with the ACA reporting requirements. The key deadlines are:

1. Furnishing to Employees: Employers must provide Form 1095-C to their full-time employees by Monday, March 3^rd, 2025.
2. Filing with the IRS:
   • Paper Filing:If employers are submitting their forms via paper (typically allowed for those with fewer than 10 forms), they must do so by Friday, February 28^th, 2025.
   • Electronic Filing:Employers required to or choosing to file electronically (usually those issuing 10 or more forms) must submit their forms to the IRS by Monday, March 31^st, 2025.

It's essential for employers to be aware of and meet these deadlines to avoid potential penalties and ensure proper compliance with the ACA's reporting mandates.

What are the Form 1095-C filing penalties?

Employers who don't comply with the Form 1095-C Filing and furnishing requirements may face penalties. These penalties are as follows:

• Failure to Furnish Forms to Employees:If employers don't provide Form 1095-C to their employees by the deadline, they could be fined for each form not furnished.
• Failure to File with the IRS:Employers who don't submit their filing to the IRS by the deadline may also incur a penalty for each form not filed.
• Failure to File Electronically (when required):Employers who are required to file electronically and fail to do so may be subject to a penalty for each form not filed electronically.

The per form fine amount for each of the above penalties was $330 per form for tax year 2024. It's also worth noting that intentional disregard for the requirements can lead to higher penalties. To avoid such financial setbacks, employers must stay informed about the current penalty rates and ensure timely compliance with all ACA reporting mandates.

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How to prepare for Form 1095-C filing

Preparing for Form 1095-C filing requires careful planning and data collection to ensure accurate and timely reporting in compliance with the ACA. Initially, employers should gather essential information about their full-time employees, health insurance offers, and coverage provided. It's crucial to maintain updated records throughout the year, capturing any changes in employment status or coverage. Employers should also establish a timeline, considering both the deadlines for furnishing the form to employees and filing with the IRS.

Using ACA-compliant software or working with a trusted third-party provider can streamline the process, ensuring the correct compilation and submission of data. Regular training or consultations can help HR and payroll departments stay informed about any changes in reporting requirements or guidelines. In summary, proactive data management, understanding the regulatory landscape, and leveraging technological solutions are key to effectively preparing for Form 1095-C filing.

Final Thoughts

Navigating the requirements of Form 1095‑C may feel daunting, but a solid grasp of its rules and deadlines is essential for Affordable Care Act compliance. With accurate data and reliable tools, the reporting process becomes far more manageable. Remember, timely and precise filing supports not only regulatory obligations but also your employees’ understanding of their health‑coverage benefits.

Viewed against the broader goals of the ACA, the 1095‑C statement stands as a key instrument of transparency—demonstrating an employer’s commitment to both legal accountability and workforce well‑being. Clear communication and meticulous record‑keeping remain the cornerstones of successful compliance in today’s evolving healthcare landscape.