Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (2024)

When an employer provides health coverage to its staff, Form 1095-C must be issued to employees and filed with the Internal Revenue Service (IRS). This is a requirement by law for both employers who provide health insurance, and those who choose to include it in their company’s benefits package. For example, under the Affordable Care Act (ACA), employers with at least 50 full-time employees — also referred to as Applicable Large Employers (ALEs) — are required to offer health insurance, or pay a penalty if they fail to provide coverage.

Fast facts about Form 1095-C

  • Applicable Large Employers use IRS Form 1095-C to report specific information regarding health insurance coverage
  • ALEs must provide the form to each full-time employee, regardless of whether health insurance was offered to the employee
  • Failure to file, or provide Form 1095-C may result in IRS penalties

Though ALEs avoid penalties by providing health coverage to their employees, many also offer it because it can make companies more appealing to job seekers. That said, either scenario has specific reporting obligations, including the issuance and filing of Form 1095-C.

In this guide, we’ll discuss more about the purpose of Form 1095-C, who should receive it, the required criteria to make sure it is filed without issues, and what can come of failing to distribute or file the form.

What is Form 1095-C used for?

To begin, Form 1095-C, or “Employer-Provided Health Insurance Offer and Coverage,” was developed by the IRS for ALEs to satisfy applicable reporting requirements under the ACA.

In addition, the form is used to:

  • Provide employers with 50 or more full-time employees (including full-time equivalents) with a way to report information mandated by sections 6055 and 6056 of the ACA (both of the links will direct you to the exact spots in the law that mention these mandates). As mentioned earlier, these employers are referred to as “Applicable Large Employers,” or ALEs
  • Give ALEs a way to submit information to the IRS regarding the health insurance they offer or do not offer to their employees
  • Help ALEs provide information about the available coverage to employees eligible for group health insurance
  • Assist the IRS in determining whether an ALE should pay a penalty under the ACA’s employer-shared responsibility provisions. An ALE may owe this payment if it fails to offer affordable and minimum essential coverage to at least 95% of its full-time employees. Penalties may also be incurred for failing to adhere to applicable reporting requirements
  • To help the IRS determine whether an employee qualified for the premium tax credit because the coverage their employer offered was not affordable, or did not meet the minimum essential value

Among other things, Form 1095-C shows the months in the previous calendar year that the employee was eligible for coverage plus the cost of the coverage offered to them.

Now that we better understand what Form 1095-C is used for, let’s talk about which employees are supposed to receive it.

Who receives a Form 1095-C and what should they do with it?

In a nutshell, every individual who was employed as a full-time (or full-time equivalent) employee by an ALE for any month of the calendar year must receive a Form 1095-C.

This rule applies to both:

  • Employees who enrolled in the company’s health insurance plan
  • Those employees who declined coverage, or were not offered any coverage

Did you know?

It’s important to note that for ACA purposes, employees who work an average of 30 hours or more per week are considered full-time.

In addition, part-time employees must receive Form 1095-C if they were enrolled in the plan, and their employer is a self-insured ALE. Those employees who did not enroll in their employer’s self-insured plan are not entitled to receive the form.

Employers have several options for getting this paperwork into the hands of their employees, as Form 1095-C can be mailed, hand-delivered, or sent electronically, provided that the employee consents to electronic delivery.

What should staffers do once they receive their 1095-C?

It can be a good idea for employees to retain Form 1095-C for their personal records. Although they don’t have to attach the form to their tax return, they can refer to the information in it when completing the return.

If an employee opted out of their employer’s coverage and instead bought health insurance on their own through the marketplace, Form 1095-C will show how affordable their employer’s coverage was and whether they were eligible for the premium tax credit.

Now that we’ve covered the employee side of Form 1095-C, let’s look at the employer’s responsibilities.

Should all employers file Form 1095-C?

Only Applicable Large Employers must file Form 1095-C with the IRS. (Employers with fewer than 50 employees are off the hook when it comes to filing it.) That said, ALEs must file the form, regardless of whether or not they offered employee health insurance coverage.

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (1)

What are the steps to fill out Form 1095-C?

Completing Form 1095-C should not be too time consuming, as you will see below. The form is divided into three parts:

Instructions for Part I:

  • Lines 1 – 6: Enter the employee’s information, including their name, Social Security Number (SSN), and address.

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (2)

  • Lines 7 – 13: Enter the Applicable Large Employer’s information, including its name, Employer Identification Number (EIN), address, and phone number.

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (3)

Instructions for Part II:

  • Enter the employee’s age as of January 1, 2023, if you offered them an individual coverage HRA, or Individual Coverage Health Reimbursem*nt Agreement (ICHRA).

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (4)

  • Enter the two-digit number (01 – 12) representing the calendar month in which the health insurance plan year starts. If you did not offer the employee coverage, enter “00.”
  • Line 14: Enter the “Offer of Coverage” information using the required code. The IRS provides a series of codes in its instructions, indicating whether coverage was offered, the type of coverage, and the month(s) in which coverage was offered.

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (5)

  • Line 15: Enter the employee’s required contribution, that is, their monthly premium amount.

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (6)

  • Line 16: Enter the applicable code if any of the safe harbors or relief measures outlined in the IRS’ instructions were applied to the employee.

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (7)

  • Line 17: Enter the zip code where the employee resides if you offered them an ICHRA. The IRS uses this information to determine the ICHRA’s affordability.

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (8)

Complete Part III of Form 1095-C only if you provided self-insured health coverage, including an ICHRA. In this section, enter the required information (name, SSN, etc.) and month(s) covered for each employee and dependent who were enrolled in the plan.

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (9)

What is the deadline to furnish and file 1095-C forms?

For the 2023 calendar year, ALEs were supposed to furnish 1095-C forms to employees by March 1, 2024. Note that the IRS automatically extended the due date from January 31, 2024, to March 1, 2024, and has stated that “no additional extensions will be granted.”

That said, ALEs are generally required to report Form 1095-C to the IRS by February 28 if filing by paper, and by March 31 if filing electronically. Therefore, for the year 2023, paper filings were to be submitted by February 28, 2024, and electronic filings by April 1, 2024. Keep in mind, ALEs must also file Form 1094-C, the transmittal form, along with their Form 1095-C submission.

Note that ALEs are required to file electronically if they have 10 or more Form 1095-Cs. These returns can be submitted electronically through the AIR (Affordable Care Act Information Returns) system.

Though it’s not our favorite topic to discuss, let’s touch on potential fines an ALE may have to address should Form 1095-C fall by the wayside.

Penalties for failing to furnish or file Form 1095-C

So, what happens if an ALE fails to get this document into the hands of Uncle Sam and the employees who should receive it? ALEs who fail to file, or provide the form, may face the following IRS penalties:

  • $310 for each Form 1095-C the employer does not correctly file, with a maximum penalty of $3,783,000 per year
  • $310 for each Form 1095-C the employer does not correctly furnish to employees, also with a maximum penalty of $3,783,000 per year

If the employer intentionally disregarded the filing requirements, the IRS may increase these penalties. However, if there is a reasonable cause for noncompliance, the IRS may waive the fines.

To avoid failure-to-file penalties, ALEs may request a 30-day extension by submitting IRS Form 8809. It is essential to file this form by the due date.

Resources mentioned in the article around Form 1095-C

For your reference, the resources below are linked in the article text above.

Get familiar with Form 1095-C

Offering employees access to health benefits can attract talented job seekers to your company and discourage long-standing employees from moving to another organization. It can also help with compliance, as certain employers are required by law to provide health insurance based on the size of their workforce. It can be worthwhile for businesses who offer this perk to find out more about Form 1095-C so that the IRS — and employees who need to receive the plan details — receive it without issues.

Form 1095-C is a document that employers providing health insurance should be familiar with | OnPay (2024)


What is Form 1095-C and what do I do with it? ›

Form 1095-C provides information about the health coverage offered by your employer and, in some cases, about whether you enrolled in this coverage. Use Form 1095-C to help determine your eligibility for the premium tax credit.

What happens if I don't report my 1095-C? ›

What happens if I don't report my Form 1095-C? If you are an employee and you don't include your 1095-C with your tax return, that's fine. You do not need to file or report your Form 1095-C. Internal Revenue Service.

What code do you enter on 1095-C if an employer had coverage? ›

Form 1095-C Decoder
Code:What it means
2EYou were covered by a Union plan.
2FYour employer offered you coverage that was considered affordable based on your W-2 wages, but you did not enroll.
2GYour employer offered you coverage that was considered affordable based on the federal poverty line, but you did not enroll.
5 more rows

What is the deadline for employers to provide 1095-C forms to employees? ›

It's that time of year again – Affordable Care Act reporting season, when employers prepare to comply with ACA 1095-C furnishing deadline 2023. To meet ACA deadlines, employers must furnish forms to their full-time employees by March 1, 2024.

Do I need both 1095-A and 1095-C? ›

You'll receive Form 1095-A if you purchased insurance through the Health Insurance Marketplace. Forms 1095-B and 1095-C are for informational purposes only and don't need to be reported on personal income tax returns.

How to read a 1095-C form? ›

The actual form is broken up into three parts:
  1. The employee information and the Applicable Large Employer (ALE) Member information.
  2. The employee offer and coverage section, which shows any costs.
  3. A review of the covered individuals under that individual employee's plan.

Does a 1095-C affect your tax return? ›

The Form 1095-C contains important information about the healthcare coverage offered or provided to you by your employer. Information from the form may be referenced when filing your tax return and/or to help determine your eligibility for a premium tax credit.

What to do if your 1095-C is wrong? ›

Form 1095-C.

If correcting information on a Form 1095-C that was previously filed with the IRS, file a fully completed Form 1095-C, including the correct information and enter an “X” in the “CORRECTED” checkbox. File a Form 1094-C (do not mark the “CORRECTED” checkbox on Form 1094-C) with corrected Form(s) 1095-C.

What is the penalty for filing a 1095-C? ›

In 2024, the IRS may assess a penalty of $310 per return to organizations that submit 1095-C forms late, and after Aug. 1, 2024. If the employer neglects their filing obligations altogether, the penalty increases to $630, per return.

What employers must file 1095-C? ›

Employers with 50 or more full-time employees (including full-time equivalent employees) in the previous year use Forms 1094-C and 1095-C to report the information required under sections 6055 and 6056 about offers of health coverage and enrollment in health coverage for their employees.

What is the employee count for 1095-C? ›

The Affordable Care Act (ACA) requires employers with 50 or more full-time equivalent employees—known as Applicable Large Employers (ALE)—to offer healthcare coverage to full-time employees or potentially face a fine. The IRS uses Forms 1094-C and 1095-C to keep track of this information from one year to the next.

Why is my 1095-C blank? ›

If a company is self-insured and an employee did not enroll in medical coverage for any months in the reporting year, Part III of Form 1095-C should be completely blank for the employee. Note: Part II of Form 1095-C shows the Offer of Coverage, while Part III shows those that are actually enrolled in Coverage.

Why did I get a 1095-C from my employer? ›

Large employers must offer health insurance to their full time workers or pay a penalty. These employers also must provide their employees with Form 1095-C to document that health coverage was offered.

What is the 1095-C form used for? ›

Form 1095-C shows if you had health insurance through your employer. Since you don't actually need this form to file your taxes, you don't have to wait to receive it if you already know what months you did or didn't have health insurance.

When did 1095-C become mandatory? ›

Sending out 1095-C forms became mandatory starting with the 2015 tax year. Employers send the forms not only to their eligible employees but also to the IRS.

Do I need to file 1095-C with my tax return? ›

Do I need my Form 1095-B or 1095-C to file my taxes? No. Individuals do not need a copy of their 1095-B or 1095-C when filing tax returns. However, you should keep the form with your tax records.

Does a 1095-C make me get a refund? ›

No, the 1095-C form just proves that you had health coverage. It would not affect your refund as long as you answered the Health Insurance questions accurately. You don't need your form 1095-C to file your tax return. TurboTax will ask you questions about your health coverage but your form 1095-C isn't needed.

Where do I put 1095-C on my tax return at TurboTax? ›

No. Forms 1095-B and 1095-C are for your records only, as the IRS doesn't need any details from them. We'll ask a few questions about your health care coverage after you finish entering your deductions and credits in TurboTax.

How does the health care tax credit affect my tax return? ›

If you used more premium tax credit than you qualify for, you'll pay the difference with your federal taxes. If you used less, you'll get the difference as a credit. Refer to glossary for more details. ” when you file your federal taxes.


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