What is the IRS Form 1095-C?
The IRS Form 1095-C is a form that reports to the IRS if you had the minimum essential coverage required under the Health Care Reform and the Affordable Care Act (ACA) and also which months of the year you had the qualified coverage.
Form 1095-C is filed and furnished to any employee of an Applicable Large Employers (ALE) member who is a full-time employee for one or more months of the calendar. ALE members must report that information for all twelve months of the calendar year for each employee.
What is the IRS Form 1095-C used for?
The purpose of filing Form 1095-C, Employer-Provided Health Insurance Offer and Coverage by the applicable large employers is to report their employee’s health coverage information to the IRS.
With this, employers can communicate to the IRS that they offered qualified health insurance coverage to the eligible full-time employees, and the coverage meets the minimum essential coverage requirements.
Who Must File 1095-C Form？
An ALE Member must file a Form 1095-C for each employee who was a full-time employee of the ALE Member for any month of the calendar year. Generally, the ALE Member is required to furnish a copy of the Form 1095-C (or a substitute form) to the employee.
*An ALE Member is, generally, a single person or entity that is an Applicable Large Employer, or if applicable, each person or entity that is a member of an Aggregated ALE Group.
When to File 1095-C Form?
The deadlines for filing Form 1095-C with the IRS and furnishing copies to the recipient are as follows:
- March 2, 2021, is the deadline to distribute recipient copies.
- March 1, 2021, is the deadline to paper file Forms 1095-C with the IRS.
- March 31, 2021, is the deadline to e-file Forms 1095-C with the IRS.
Instructions on How to Fill Out Form 1095-C
These instructions will help you with completing the filing process of Form 1095-C.
1. Instruction to complete Part I, Employee & ALE Member of Form 1095-C
Before proceeding further to fill the employee’s offer of health coverage details, the IRS requires you to complete a few basic information about you & your employees.
You will need the following information to complete Line 1-13 in Part I of Form 1095-C.
- To complete Line 1 - 6 of Form 1095-C, you need the employee information such as Name, SSN, Street address, City, State, Zip Code
- To complete Line 7 - 13 of Form 1095-C, you need the employer information such as Name, SSN, Street address, City, State, Zip Code
2. Instruction to complete Part II, Employee Offer of Coverage of Form 1095-C
The IRS has recently made some changes in Form 1095-C related to the ICHRA plan. So, before entering into the lines, employers need to fill the employee’s age & plan start month.
- Age: If the employee was offered an ICHRA, enter the employee’s age on January 1, 2020.
- Plan Start Month: ALE must complete this box for the 2020 Form 1095–C. Enter the two-digit number (01 through 12) representing the calendar month during which the plan year begins of the health plan in which the employee is offered coverage.
After completing these fields, employers must start entering the employee’s offer of coverage information.
Line 14-17 is all about the employee offer of coverage.
- Offer of Coverage
This section of the form is where the ACA codes come into play. Line 14 is designed to collect information from the employer about their employee’s offer of coverage. In this line, employers need to indicate the employee’s coverage status for each month of the year by entering the appropriate code.
- Indicator Codes for Employee Offer of Coverage (Form 1095-C, Line 14)
IRS designed the Code Series 1 indicator codes from 1A to 1S which represent the type of coverage, if any, offered to an employee, the employee’s spouse, and the employee’s dependents.
A code must be provided for each calendar month, January through December, even if the employee was not a full-time employee for one or more of the calendar months.
For instance, 1B represents that the employee was offered minimum essential coverage, but it was not extended to their spouse or dependants.
- Reporting of ICHRA in Line 14 Codes of Form 1095-C for 2020
On July 13, 2020, the IRS released new codes from 1L to 1S for employers to indicate the method used to determine their ICHRA plan’s affordability.
An ICHRA is an employer-sponsored reimbursement plan that allows employees to purchase their health insurance plan privately or on the open market.
In turn, the plan reimburses the employee to help them cover a portion of their medical costs and/or premiums.
- Employee Required Contribution
The employer will need to indicate the Employee Required Contribution, which is the monthly premium that the employee was required to pay each month of the calendar year.
- Section 4980H Safe Harbor and Other Relief
Line 16 is for employers who have used Safe Harbors or alternative methods for calculating the affordability of their health insurance coverage.
- Line 16 Codes of Form 1095-C, Safe Harbor
IRS designed the Code Series 2 indicator codes from 2A to 2I to determine affordability.
For example, if a 2H is entered, this indicates that the employer used the Rate of Pay Safe Harbor to determine the affordability.
- ZIP Code
Line 17 is a new addition to Form 1095-C related to the ICHRA plan. Employers who offered ICHRA must now report the zip code of where their individual resides. This geographical information is used by the IRS to verify the plan’s affordability.
3. Instruction to complete Part III, Covered Individuals of Form 1095-C
After entering the offers of coverage details, you must start entering the individual coverage details. Line 18-30 is all about the individual’s coverage details.
- In this section of Form 1095-C, the employer must indicate every covered individual by checking the boxes for every month of the year that they were covered. This includes coverage information for any spouses or dependents included in the health insurance coverage offer.
- Please note that if you are a self-insured employer, you only need to enter information related to the employees who were enrolled in the coverage.
10 FAQs to Better Understand IRS Form 1095-C
Q1: Should I attach Form 1095-C to my tax return?
No, Form 1095-C is for your records only. Do not attach it to your return. Your employer sends a copy to the IRS, which they then use to match with the information you enter.
Q2: What’s the difference between Form 1095-A, 1095-B and 1095-C?
- IRS Form 1095-A provides information as to any Marketplace coverage you had (if applicable), and any Premium Tax Credits you received.
- IRS Form 1095-B details the months of coverage that you, your spouse and/or any eligible dependents had for each month. Form 1095-B is sent by your insurance carrier and provides details about the health insurance coverage you elected, including who in your family was covered.
- IRS Form 1095-C provides information regarding any employer-provided health insurance coverage – or offers of coverage. It may also detail the months of coverage you and any spouse and/or eligible dependents had during each month.
Q3: What do I do with the Form 1095-C?
Keep this form with the materials you give to your tax preparer. If you prepare your own taxes, you may need to refer to this information as you prepare your return.
Q4: Should I wait for the form to prepare my income tax return?
In most cases, you do not need to wait for the Form 1095-C in order to file your U.S. Individual Income Tax Return (IRS Form 1040, 1040A, or 1040EZ). Most employees will know whether they had health coverage for a month and can simply check a box on their tax return to attest that they, their spouse (if filing jointly), and any eligible dependents had “minimum essential coverage” throughout the year.
Q5: Under what circumstances would I need the information on Form 1095-C to file my U.S. Individual Income Tax Return?
- You received an advance premium tax credit or wish to take the premium tax credit on your return;
- You had a gap in coverage of more than three consecutive months.
Q6: Do I need to attach Forms 1095-A, 1095-B, or 1095-C to my federal tax return?
No, do not submit these with your tax return. However, you may need to refer to them in order to complete your tax return.
Q7: How will I receive Forms 1095-C?
You may receive these forms by U.S. Mail, or hand delivery (for example, from your employer); or, if you consented to receive the forms electronically, you may receive the form via email.
Q8: When will I receive Forms 1095-C?
By January 31st, covering the previous year.
Q9: What if I don’t receive a Form 1095-C from my employer by January 31st?
Not all employers will furnish a Form 1095-C. Only large employers – those with an average of 50 or more employees – are required to furnish them. You may need to call your employer to ask if they will be providing these forms.
Q10: Who do I contact if I have a question about the form that I receive?
Each form has a contact number if you have questions.