What is ACA Form 1095-C?

This article further explores the following points:

  • Purpose Of Form 1095 -C
  • Who Must File Form 1095 -C?
  • What is the deadline for filling form 1095 -C?

What is ACA Form 1095-C? - An Overview:

- Updated september 14, 2020 - 8.00 AM - Admin, ACAwise

This instruction would help employers to know about Form 1095-C Filing Requirements.

When the Affordable Care Act was passed, the IRS updated their Internal Revenue Code to include Sections 6056. Sections 6056 of the IRC outline the protocol for reporting ACA compliance and offers of coverage to
the IRS.

What is the purpose of Form 1095-C?

With the creation of the Affordable Care Act, certain employers must offer their employees quality, affordable health insurance. To ensure that employers are doing so, they must report this information to the IRS. The Form 1095-C is the form used to report this information about coverage offered to the employees.

Employers must file Form 1095-C for each of their employees, as each provides information on the employee’s health insurance coverage for each month of the year.

In addition to filing this form with the IRS, mandated filers must also furnish their employees with a copy of the Form 1095-C.

Who must file Form 1095-C?

The IRS defines an applicable large employer (ALE) as having 50 or more full time or full time equivalent employees. All ALEs must complete the Form 1095-C and file it with the IRS.

Aggregate employers with several different businesses must file if their total number of employees across all of these businesses is equal to 50 full-time employees.

What is the deadline for filing Form 1095-C?

The deadline to file Form 1095-C with the IRS is generally due on February 28th if you are paper filing your forms with the IRS. If you are planning to file electronically, the deadline is usually March 31st.

Copies of the Form 1095-C must be distributed to recipients by January 31.

It is important to note that if your business is filing more than 250 returns, you are required to file electronically by the IRS.

There is an extension available to ALEs who need additional time to gather the necessary documentation needed to file this form with the IRS. The Form 8809 extends the deadline for ACA reporting an additional 30 days past the original deadline. ALEs who wish to file this extension, must do so on or before the original deadline for approval.

What information is required on Form 1095-C?

The Form 1095-C is a complex IRS tax form that reports a variety of information that is relevant to the ACA requirements. This form will break down each of your employees’ health coverage status for each month of the year. This form also reports when you made an offer of health insurance coverage to your employee, regardless of whether they accepted.

Here are a few lines of the Form 1095-C that are important to note.

Line 14

This line reports the offer of coverage from the employer to the employee. This is where the employer must prove that they made an offer of health insurance to all qualifying
full-time employees.

Line 16

Line 16 is designed to report information about the nature of the employee’s health insurance. This is where the IRS will look to make sure that the employer is providing health insurance that the IRS deems affordable. The health insurance plan must meet the Minimum Essential Coverage (MEC) requirements set in place
by the IRS.

This is the line where Safe Harbours come into play. A Safe Harbour is a method by which employers can prove that the health insurance coverage that they offer to their employees is in fact affordable. Under the ACA, the IRS requires that health insurance can be no more than 9.86% of an employees salary.

For additional information on the series of codes required on both line 14 and line 16,
click here.

What are the updates to Form 1095-C for reporting
tax year 2020?

New legislation regarding ICHRAs has been introduced in the past year and these plans are increasing in popularity among employers. To better track these plans and ensure the affordability for employees, the IRS has added a new line to the Form 1095-C to report
this information.

An ICHRA is an employer-sponsored reimbursement plan, which allows employees to purchase their health insurance plan either 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.

Line 17

Line 17 is used to report information regarding ICHRAs. Because the IRS uses geographical location to determine the affordability of a health insurance plan, the IRS will require the individuals zip code on this line.

Click here to know more about changes in ACA Form
for 2020.

What are the penalties associated with Form 1095-C?

he IRS is currently mailing out rounds of notices to ALEs that have failed to file or failed to file properly over the past few years. Businesses who have failed to comply with ACA reporting standards will receive a
Letter 5699 by mail, this letter is a penalty notice.

Upon receiving this letter, businesses must respond to this letter in a timely manner explaining why they failed to comply and how they plan to remedy this failure. For those who take no action penalties will ensue.

ALEs who fail to respond and comply could be charged up to $550 per form they should
have submitted.

Click here to learn more about ACA Form 1095-C Penalties.

You Can Meet your ACA Reporting Requirements with ACAwise

ACAwise is your full-service ACA reporting solution. Whether you are an experienced filer looking for an electronic filing solution, or a novice looking for complete services and code generation, ACAwise is here to help. ACAwise even provides state-filing solutions and prior year filing options.

Talk to an expert today to learn more about the many benefits of choosing ACAwise for your mandated ACA reporting.

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