What Is Form 1095-C? Everything You Need To Know

A 1095-C form is one of the required forms that Applicable Large Employers (ALEs) use to provide information about their healthcare plans to employees and the IRS. An ALE is an employer with an average of over 50 full-time employees working at least 30 hours per week, including full-time equivalent employees, during the prior calendar year. If your company is obligated to complete and distribute 1095-C forms, you may want to ask if your payroll provider includes this report as part of their payroll tax services.

What Is Form 1095-C & What Is It Used For?

The 1095-C form, Employer-Provided Health Insurance Coverage, reports information about the type of health insurance offered to applicable employees. As of 2015, all employers with an average of 50 or more employees working at least 30 hours per week, including full-time equivalent employees, during the prior calendar year must complete this tax form to remain in compliance with the Affordable Care Act (ACA). All full-time employees must receive this informational form regardless of whether they participate in the company health plan. Part-time employees will receive the form only if the company is self-insured and they enroll in the company-sponsored health plan.

What's Included in Form 1095-C?

The 1095-C form includes information about health care plans offered by an employer, the cost of coverage, and what months coverage was offered. The form is divided into three parts.

Part I

The first part of the form reports information about the employee on lines 1-6, including their name, Social Security Number, and address. Lines 7-13 report information about the employer, including their address, a contact phone number, and an Employer Identification Number (EIN). Note that an EIN is required to complete this form.

Part II

In the second section of the form, the employer will provide details about the health care plans offered. If the employee receiving the form is eligible for health care coverage, enter their age. Employers should also identify the months when the employee was eligible to participate and the month the plan year begins. Additional codes, as specified in the IRS Form 1095-C instructions, will indicate the type of plan offered.

Part III

The last part of the form contains information about the employee's family members who enrolled in the health care coverage, including their date of birth and tax identification number.

Who Has To File Form 1095-C?

Employers with 50 or more full-time employees must complete the form as defined in the ACA. Additionally, the employer will send a copy to the IRS. Employees do not need to fill out any information on the form, but they should keep the copy they received with their annual tax records. Any questions about the information on the form can be addressed to the employer or a professional tax preparer.

Does Everyone Receive a 1095-C?

ALEs must complete a 1095-C tax form for every full-time employee eligible for health care coverage for one or more months during the calendar year. Full-time employees who enroll in the company's health care plan will receive the form, as will full-time employees who decline the coverage available. Part-time employees enrolled in a self-insured company health care plan will receive a 1095-C. Any part-time employees who do not participate in the plan do not need to receive this form. Self-insured ALEs may use either the 1095-C or 1095-B for every non-employee (e.g., retiree) enrolled in the coverage offered.

How Do I Get My 1095-C?

Generally, employees will receive this form in the mail by the end of January for health care insurance coverage related to the previous tax year. Note that only the employed person receives the form. The employee must provide a copy if a covered family member needs one.

What Is the Deadline To Send Out 1095-C Forms?

Employers should be aware of the multiple deadlines for 1095-C forms. First, copies must be provided to employees. The due date for furnishing Form 1095-C is automatically extended by 30 days from January 31, 2024, to March 1, 2024. The IRS Form 1095-C deadline will depend on what method of filing the employer chooses. For the calendar year 2023, Form1095-C must be filed by February 28, 2024, if filing on paper, or April 1, 2024, if filing electronically.

Is There a Penalty if You Don't Provide Form 1095-C?

Employers who fail to meet filing deadlines or report incorrect information on an informational return may be subject to IRS penalties. Failure to file an informational return such as the 1095-C can result in a penalty of $310 per form, capped at $3,783,000. A similar penalty structure applies to filing an incorrect form. If you believe you have reasonable cause for failing to file, you may wish to speak to your tax professional about requesting a waiver of these penalties.

Where To File 1095-C Forms & Avoid Penalties With Paychex’s Tax Services

Compiling tax forms and reporting information to the IRS are part of employers' payroll responsibilities. Falling out of compliance can result in spending additional time back-tracking through payroll records and bearing the added cost associated with tax penalties. Taking advantage of Paychex’s Employer Shared Responsibility services can be a cost-efficient way to help your business comply and avoid payroll tax errors such as the failure to file a 1095-C.