Forms 1094-C and 1095-C are used by companies to report necessary information about health insurance and coverage to the IRS (Internal Revenue Service). The forms show which employees have health coverage through their organization and which employees have been offered health insurance.
The Affordable Care Act (ACA)
To understand why these Forms 1094-C and 1095-C are needed, it helps to understand the Affordable Care Act (ACA)—aka The Patient Protection and Affordable Care Act. This act was passed in 2010. As part of the ACA, applicable large employers (ALEs) must offer health insurance coverage to their employees. It’s not just a nice perk; it’s required.
Under Sections 6055 and 6056 of the IRS Code, ALEs also need to file specific forms—such as 1094-C and 1095-C—with the IRS to help the government see who is and isn’t provided with health coverage, and who isn’t complying with the ACA.
Form 1094-C—aka Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns—provides the IRS with information about your organization.
- The employer identification number and the contact information of the company
- The name of a contact person at the organization
- The number of employees (including total employees and the number of full-time employees)
- The number of 1095-C forms being filed
Form 1094-C is a summary of the information included in the Form 1095-Cs that are being submitted at the same time. Form 1094-C is only provided to the IRS and isn’t given to employees.
Form 1095-C—aka Employer-Provided Health Insurance Offer and Coverage—is filed individually for every employee who was full-time for a minimum of one month of the year. Each year, you need to send this form to every employee at your organization who is eligible for health coverage, even if they don’t get coverage from your company’s plan. You also need to file all these Form 1095-Cs with the IRS.
Form 1095-C includes information about:
- The health coverage offered by your organization
- The months of the year when the employee could have had health coverage through your company’s plan
- The least-expensive premiums the employee can pay
If you are required to file these forms, you need to send your employees their copies of 1095-C by the end of January. Your employees are asked to review the information on these forms. When filing Forms 1094-C and 1095-C with the IRS, you have until the end of February if you’re filing paper copies. If you’re filing electronically, you have until the end of March. Companies with over 250 employees must file electronically.
Why Is Filing Forms 1094-C and 1095-C Important?
The IRS is responsible for enforcing the ACA’s goal to make healthcare accessible to everyone. By filing Forms 1094-C and 1095-C when you’re required to, you make a difference.
- You avoid penalties. Penalties can be $2,750 per employee, so they can add up.
- You help the government to know who needs extra help getting affordable health coverage. There are programs and financial assistance available to help workers not covered by an employer’s health coverage. When you file Forms 1094-C and 1095-C, you help the IRS see who needs to be contacted about these programs.
- You help the government know who has coverage. This can help the government adjust its programs so more Americans get health coverage.
Is My Organization an ALE?
You only need to file 1094-C and 1095-C if you’re an applicable large employer (ALE). An ALE has over 50 full-time employees or Full-Time Employee Equivalents (FTEs)—when more than one part-time worker’s hours are combined to be equivalent to that of a full-time worker. The ACA counts a 30-hour workweek as full-time. So you may have 50 FTEs—and may be required to file 1094-C and 1095-C—if you have a team of part-time workers and full-time employees.
You can determine your FTE total by using the following formula:
Number of Full-Time Employees + (Total Part Time Hours Worked/30)
Let’s say you have 30 employees who work 30-40 hours per week, 5 employees who work 20 hours a week, and 5 employees who work 25 hours a week. You would have 37.5 FTEs (30+(225/30)=37.5). In this case, you would not be an ALE and would not need to file forms 1094-C and 1095-C.
Other Reasons to File
There’s another scenario where you might need to file forms 1094-C and 1095-C: if you’re part of an Aggregated ALE Group. An Aggregated ALE Group is a group of companies or employers who are treated as one company by the IRS. This can happen because one company owns others, or if multiple businesses are owned by the same person. If you’re part of this type of group, keep in mind that the IRS will consider the FTEs for all employers in your group, so you may need to file 1094-C and 1095-C.
And what happens if you’re not an ALE but still offer health coverage for workers? In this case, you may need to file Forms 1094-B and 1095-B with the IRS if you offer self-insured coverage.
How Do I File Forms 1094-C and 1095-C?
If you do have more than 50 FTEs, you need to file 1094-C and 1095-C. There are a few steps you will want to take.
- Create a process for filing. You can assign an employee or financial representative to be a point of contact on Form 1094-C to ensure it gets filled in and filed correctly. Tax filing software can be used to remind you of upcoming deadlines and even auto-fill some forms for you.
- Get the latest copies of the forms. The IRS website has the forms and the instructions for the current year, as well as the deadlines for filing.
- Offer support to employees. Employees who get Form 1095-C receive instructions along with their form. These instructions are written by the IRS, and are not always easy to understand. You may want to create your own training in Connecteam to support your workers to review and fill out their forms correctly. Assign a person on your team who can answer questions from employees who need extra help.
1094-C and 1095-C at Your Organization
If you have the equivalent of 50 full-time employees or are part of a larger group of companies, you may need to file 1094-C and 1095-C with the IRS each year. These forms are always filed together, and they help the government determine whether all employers who need to provide healthcare coverage for workers are doing so. Filing your forms on time helps you avoid steep penalties and ensures workers get the health coverage they need.
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