It’s tax season: your favorite time of year for filling out a million forms, staring at your computer for hours, and maybe pulling out your hair just a bit. But, reporting doesn’t have to end in partial balding. The Affordable Care Act (ACA) requires businesses with 50 or more employees to provide health insurance. To prove that they meet these requirements, companies need to file the Form 1094-C and Form 1095-C.
Filing season can be an administrative headache. The IRS estimates that the Form 1094-C alone can take up to four hours to complete. The Form 1095-C, which is sent to both employees and the IRS, clocks in at only 12 minutes per form. For a company with 100 employees, that means you’ll spend 25 hours completing them.
Let's make ACA reporting easier. With our guide to Forms 1094-C and 1095-C, you’ll be the most relaxed, compliant employer on the block—with a full head of hair to prove it.
What are Forms 1094-C and 1095-C?
The ACA’s forms aren’t just requirements meant to make tax season stressful. They allow the IRS to keep a closer eye on what coverage employers are offering to their employees—specifically, that they are providing the minimum essential coverage required by law.
The Form 1094-C, or Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, is like a cover letter for the Form 1095-C. In other words, you only send one. It provides basic employer information and the number of 1095-Cs your company is submitting.
The Form 1095-C, or Employer-Provided Health Insurance Offer and Coverage, shares your employee health care plans with the IRS so they can ensure you're meeting ACA requirements. A form has to be filed for each employee, regardless of whether they enroll in your company's healthcare plan or not.
In addition to determining instances of improper coverage, the Form 1095-C determines whether an employee qualifies for the premium tax credit. The credit offers assistance in purchasing health insurance from the Health Insurance Marketplace, the government or state-regulated market where those without health insurance can purchase private healthcare. An employee can receive the tax credit if he or she is not provided minimum essential coverage, which is specified on the Form 1095-C.
Who has to file Forms 1094-C and 1095-C?
If you employ 50 or more full-time employees, you’re an Applicable Large Employer (ALE). Anytime you see "ALE" in an Affordable Care Act document, they’re talking about you. That also means you have to file Forms 1094-C and 1095-C.
Employers with fewer than 50 employers aren't quite off the hook. If these companies provide employer-sponsored self-insured health coverage, they need to file Forms 1094-B and 1095-B. These are the same as forms 1094-C and 1095-C, but they are for smaller organizations that follow different compliance policies.
Who do you send your ACA forms to?
The Forms 1094-C and 1095-C have to be filed with the IRS. Filing can be done by mail or electronically; however, employers with more than 250 employees must file electronically.
In addition to sending the IRS a 1095-C form for each employee, employers must furnish every employee with a written statement reporting the same personal health insurance information. It’s easiest if the written statement is just a copy of the employee’s 1095-C, but it doesn’t have to be. Whatever form you do choose, it must be one of the IRS’s acceptable substitute statements.
How do I file the Form 1094-C?
You have to send the IRS one Form 1094-C and one Form 1095-C for each employee.
Part I. This section of the Form 1094-C relays the employer’s name, employer identification number (if you don’t have one, you can apply online), address, name, and point of contact. This is also where you accurately record the number of employee Form 1095-C filings you're submitting along with this form.
Part II. Thisis the most complicated part of Form 1094-C—specifically line 22, "Certifications of Eligibility." It’s also the most important section to get right. This line designates whether or not an employer can use an offer method or transition relief. You can check one of four boxes:
A. Qualifying Offer Method. Choose this option if you made a qualifying offer (offering minimal essential coverage) to one or more full-time employees for the entire year they worked full-time for you.
B & C. Reserved. Sections B and C were options used in 2015 and are no longer used.
D. 98 Percent Offer Method. Check this box if you offer affordable health coverage and provide minimum value to at least 98 percent of the employees you fill out a 1095-C form for.
Part III. This section is where you indicate whether your company offered minimum essential coverage to at least 95 percent of full-time employees for the entire calendar year. If you have done so, check the "Yes" checkbox on like 23 for "All 12 Months." If, however, your company failed to meet essential coverage during certain months, you must indicate which months you failed to meet coverage requirements by selecting "No" next to the month.
Part IV. If you checked "Yes" on line 21 (Is ALE Member a member of an aggregated ALE group?), then you must fill out this section. If you were a member of an aggregated ALE group for any month of the year, you must specify the group member's names and EINs. The form has room for up to 30 aggregated ALE groups, but if your company was a member of more than 30, include the top 30 members with the highest monthly average of full-time employees.
How do I file the Form 1095-C?
The 1095-C form is all about the employee. Remember, you must submit one for each individual.
Part I. This section of the form includes the employee’s name, social security number, address, as well as the employer’s information.
Part II. This lays out the coverage that the employee received for the year. There are different codes that correspond to different types of coverage and they can be found on the IRS website here.
Part III. This section of the form will only be filled out if the employer offered a self-insured major medical plan and a health reimbursement arrangement. If you didn’t, go ahead and skip this section.
When are the filing deadlines?
If you’re physically mailing forms to the IRS, both must be post-marked by February 28, 2019. Feeling rushed? Filing electronically can buy you more time. The online filing date is April 1, 2019. And when it comes to delivering form 1095-C to employees, the cut-off date is March 4, 2019.
Paper Filing Deadline
Electronic Filing Deadline
February 28, 2019
March 4, 2019
April 1, 2019
Note: The Form 1095-C furnishing deadline was originally set for January 31, 2019 before the IRS pushed it back to March 4, 2019. Read more about the change here.
Worried about meeting deadlines? If you're running late, it's possible to get an extension. For an easy 30-day extension, no signature or explanation necessary, fill out the Form 8809 and file it by the due date of the returns. Just be sure to file it before the due date, or you could face strict penalties for missing a filing deadline.
What if a form has a mistake?
Did you send in a form with a mistake? Don’t worry—you have the chance to file a correction form for either the 1094-C or 1095-C.
To file 1094-C corrections, send the updated form by itself. Nothing else can go with this form. On the correct form, mark the "corrected" box with an “X.” For specific cases and how to deal with them, consult the chart on the IRS site.
A corrected Form 1095-C must be sent along with a 1094-C transmittal form. Be sure to only check the "corrected" box on the Form 1095-C, not 1094-C. A copy of the corrected form must also be furnished to the employee. Again, refer to the IRS charts for specific mistakes and how to take action.
The final step: Take a deep breath. These forms aren’t as scary as the paperwork makes them seem. With the proper planning and an HR provider who’s got your back, you’ll be sure to steer clear of those costly penalties.