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, Employer-provided Health Insurance Offer and Coverage, is a tax form provided by employers to their eligible employees. It provides information about the health insurance coverage that was offered to the employee, their spouse, and dependents. Employees also receive Form 1095-C for their records.

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 captures detailed information about the health insurance offer and coverage extended to full-time employees. The form is divided into three parts:

• Part I - Employee & Employer Information, Lines 1-13
  • This section should include the basic information for the employee and employer, such as name, tax identification number, address, and contact information.
• Part II - Employee Offer of Coverage
  • This section should show the offer of coverage for each month of the year, using the specified codes issued by the IRS.
    • Line 14 - Offer of Coverage Series 1 Codes
    • Line 15 - Employee Required Contribution amount
    • Line 16 - Section 4980H Safe Harbor and Other Relief Series 2 Codes
    • Line 17 - Zip Code
• Part III - Covered individuals, Lines 18-30
  • This section includes information for all individuals that were covered under the offered healthcare insurance plan. It should only be completed if the employer offered an employer-sponsored, self-insured plan in which the employee or other covered individual enrolled in.

Collectively, the data in Form 1095-C helps the IRS determine an employer's adherence to the ACA's mandates and an employee's eligibility for premium tax credits.

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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 March 2nd of the year following the reporting year.
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 February 28th of the year following the reporting year.
   • 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 March 31st of the year following the reporting year.

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 $310 per form for tax year 2023. 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.

Parting Thoughts

In wrapping up, the intricacies of Form 1095-C and its regulatory nuances underscore the critical nature of employer reporting in line with the Affordable Care Act. While the complexities might seem overwhelming at first, being equipped with the right information and resources ensures a smoother compliance process. Employers bear a responsibility not just to regulatory bodies but also to their employees, providing clarity about their health coverage.

As we reflect on the ACA's objectives and the broader healthcare landscape, the Form 1095-C emerges as a critical tool—highlighting an employer's commitment to transparency and the overall well-being of its workforce. It's a testament to the evolving narrative of health coverage, emphasizing the importance of clear communication and due diligence in today's corporate world.