Form 1095-C: Employer-Provided Health Insurance Offer and Coverage

Form 1095-C: Employer-Provided Health Insurance Offer and Coverage

If you work for an employer who offers health insurance coverage, you’ll likely receive Form 1095-C each year. This form is a critical part of your tax reporting and plays a role in showing that you were offered health coverage that meets the requirements of the Affordable Care Act (ACA). The form helps the IRS track compliance with the ACA’s employer mandate and provides essential information for your personal tax return.

But what exactly is Form 1095-C, and how does it impact your taxes? Let’s dive into the details and break down everything you need to know.

What is Form 1095-C?

Form 1095-C is a tax document provided by your employer if they are an applicable large employer (ALE), which generally refers to businesses with 50 or more full-time employees. The form reports whether the employer offered you health insurance that meets the ACA’s standards for minimum essential coverage and whether you were eligible for this coverage.

Employers must send this form to employees who are eligible for health insurance, even if you did not enroll in the employer’s health plan. Additionally, the form helps the IRS determine if you qualify for premium tax credits (subsidies) based on your health insurance coverage.

Who Receives Form 1095-C?

You will receive Form 1095-C from your employer if they are considered an ALE. Typically, this includes companies with 50 or more employees. Here’s who should expect to receive the form:

• Full-time employees (those who work 30 or more hours per week on average)
• Part-time employees who were offered coverage or enrolled in the employer’s plan
• Employees eligible for employer health coverage, even if they did not sign up for it

The form must be sent by January 31st of the following year, so you should expect it in your mailbox or inbox if your employer provides electronic versions.

What Information is Included on Form 1095-C?

Form 1095-C contains crucial details about your employer’s health insurance offer and coverage. Here’s a breakdown of the information included:

1. Part I – Employee and Employer Information:

   • This section includes your name and address, along with the employer’s name, address, and Employer Identification Number (EIN).
   • It will also include your Social Security Number (SSN) and the employer’s identifying information, including their EIN.

2. Part II – Employee Offer of Health Coverage:

   • This part shows whether your employer offered you health insurance coverage and which months the coverage was available. If coverage was offered, the form will specify the type of coverage (e.g., employee-only, family coverage) and whether it meets the ACA’s minimum value standard.
   • This part also indicates whether you were eligible for health coverage and whether it was affordable according to the ACA guidelines.

3. Part III – Covered Individuals (if applicable):

   • If you were enrolled in your employer’s health insurance plan, this section will list the covered individuals, such as your spouse or dependents, who were included in the health coverage.

How Do You Use Form 1095-C for Your Taxes?

Form 1095-C plays an essential role in filing your taxes, particularly in reporting your health insurance coverage and determining whether you qualify for premium tax credits. Here’s how to use the form:

1. Verify Coverage on Your Tax Return:
   You will need to report your health coverage when you file your tax return. Form 1095-C helps confirm that you had coverage through your employer. If you were covered for all 12 months, you’ll check the box on Form 1040 or Form 1040-SR to indicate that you had minimum essential coverage and avoid penalties for not having insurance.

2. ACA Employer Mandate Compliance:
   If your employer is considered an ALE and fails to offer health coverage that meets the ACA’s requirements, you might be eligible for the Premium Tax Credit. Form 1095-C helps the IRS determine if the health insurance offer was affordable and met the minimum value standard. If your employer’s coverage was unaffordable, you may qualify for subsidies to purchase coverage through the Health Insurance Marketplace.

3. Use Information for Form 8962 (Premium Tax Credit):
   If you qualify for premium tax credits due to your employer’s coverage being unaffordable, Form 1095-C is used to reconcile the amount of the premium tax credit. If your employer offered you coverage that met the ACA’s standards, Form 1095-C will provide the necessary information to determine if you are eligible for credits.

4. Keep It for Your Records:
   Even if you don’t need to submit Form 1095-C with your tax return, be sure to keep it for your records. It can help in case the IRS requests verification of your coverage, or if there are any discrepancies on your tax filing.

Common Issues with Form 1095-C

While Form 1095-C is a vital part of your tax return, there are common issues that you may encounter:

1. Errors on the Form:
   It’s possible that there might be errors on the form, such as incorrect dates, months of coverage, or inaccurate employer information. If you spot any errors, contact your employer’s HR department to have them corrected before you file your taxes.

2. Not Receiving the Form:
   If your employer is required to send you Form 1095-C but you don’t receive it by the end of January, contact your employer to ensure they have sent it. Employers are required to provide this form, and if you don’t get it, you cannot claim that you had employer-sponsored health insurance on your tax return.

3. Misunderstanding Employer-Provided Coverage:
   If you are unsure whether the coverage your employer provided qualifies as “affordable” or meets the ACA’s minimum standards, it’s a good idea to review the details on Form 1095-C and consult a tax professional for guidance. This is particularly important if you’re trying to claim a Premium Tax Credit.

4. Multiple Forms for Multiple Jobs:
   If you had more than one job during the year, or if you had different coverage through multiple employers, you may receive multiple Form 1095-Cs. Be sure to review each one to confirm your health coverage status across all employers.

Key Takeaways

• Form 1095-C is crucial for reporting employer-provided health coverage and confirming that it meets the ACA’s minimum standards.
• It helps you avoid penalties for not having health coverage and is used to determine eligibility for premium tax credits.
• Verify the accuracy of the form, especially if there are discrepancies in the months of coverage or the affordability of the coverage.
• Keep Form 1095-C for your records, even if you don’t need to submit it with your tax return.

If you are uncertain about how to interpret Form 1095-C or need assistance with the tax implications of your employer-provided health coverage, consider consulting a tax professional. Understanding the details of this form is key to ensuring that your tax return is accurate and compliant.