Get ACA Compliant with IRS Forms 1094-C and 1095-C


Just as we’ve started to overcome the challenges associated with Affordable Care Act (ACA) compliance, in comes new IRS forms to increase stress levels for HR professionals. Breathe easy. IRS forms 1094-C and 1095-C actually serve a useful purpose. Simply put, they facilitate ACA compliance. The ACA includes both an employer and employee mandate. These forms ensure that both parties are holding up their end of the bargain. Congress has predicted many will not, budgeting for $9 billion in revenue from penalties in 2016 alone. Will your company contribute to that? Forms 1094-C and 1095-C will ensure that you don’t. Here’s how.

What is Form 1095-C?

Employers with 50 or more full-time employees must provide health care coverage to their full-time employees, or face a penalty. Think of form 1095-C as proof of insurance for your employees and proof that you’ve offered what you were required to offer. Companies must provide this form to each eligible employee and submit a copy to the IRS. This form is critical because it will determine whether the employer or employee must pay a penalty for non-compliance, and if the employee qualifies for a premium tax credit.

Which employees must receive a 1095-C? The IRS defines full-time employees as those working an average of 30 or more hours per week. If your company is an Applicable Large Employer (having 50 or more employees), you must provide all full-time employees with a 1095-C. Additionally, if you have employees that are part-time, but who used your insurance plan anytime during the previous tax year, these must also receive a 1095-C. Employees must receive their forms on or before March 31 for the previous tax year.

What information is contained on form 1095-C? This form is fairly detailed. Besides general information about the employer and employee, it documents the specific coverage that was offered, its affordability and who was covered, including the employee’s dependents. Employers must provide the amount of the lowest-cost premium that was offered to the employee, as well as how many months the coverage was available.

Be sure your employees understand the importance of this form. While they are not required to submit it with their tax return, they should keep it with other tax records and use it as a reference when filling out their tax return to determine their eligibility for a tax credit.

How Does Form 1094-C Fit In?

As noted above, employers are required to send individual 1095-C forms to employees, but companies must also send all its 1095-C forms to the IRS. This is where the 1094-C comes in. It acts as a summary form for the packet of 1095’s the employer is submitting.  It provides basic information on the employer, including how many employees it has and how many 1095-C forms are being submitted.

Your Checklist

Everyone is still adjusting to these new requirements. Be sure you’ve followed these steps.

  • Educate your employees. Help them understand the importance of their 1095-C form. Their tax return could be delayed if there is a discrepancy between what the employee reports to the IRS and what the employer reports regarding health care coverage.
  • Provide a 1095-C to eligible employees by March 31 for the previous tax year.
  • Submit your 1095-C forms, along with a 1094-C to the IRS by May 31 if filing by paper, or June 30 if filing electronically.

The Affordable Care Act is the largest piece of health care reform employers have seen in decades. Surrounded by controversy, employers have been anxiously watching legislators debate. However, the reality of the legislation has arrived and compliance is critical. SurmountHRM understands the challenges facing businesses today. Test out a demo of our Cloud-based Human Resource Management Solutions. Contact us to get started.








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