Filing Form 1095-C: A Complete Employers Guide to Compliance

• admin
• February 19, 2025
• 6 min read

Form 1095-C, titled “Employer-Provided Health Insurance Offer and Coverage,” is a document that Applicable Large Employers (ALEs) must file annually for each full-time employee. This form provides detailed information about the health coverage offered, including the type of coverage, the months it was available, and the employee’s share of the premium cost.

Key Takeaways

• Form 1095-C is mandatory for ALEs to report health coverage information for full-time employees.
• Timely and accurate filing, including the submission of Form 1095-C, is essential to meet Affordable Care Act (ACA) compliance requirements.
• Implementing best practices can streamline the reporting process and minimize errors.

Who Needs to File?

An Applicable Large Employer (ALE) is defined as an employer with 50 or more full-time employees (or full-time equivalent employees) on average during the preceding calendar year. Full-time employees work at least 30 hours per week or 130 hours per month, and full-time equivalents are calculated by combining part-time employee hours. If your organization meets this threshold, you must file Form 1095-C for each employee who was full-time for one or more months during the calendar year—regardless of whether the employee participated in the offered health plan. This requirement ensures transparency and compliance with the ACA’s employer mandate.

Information Required on Form 1095-C

Form 1095-C is divided into several parts, each capturing specific details necessary for compliance and reporting:

• Part I: Employee and Employer Information – Requires the names, addresses, and Social Security Numbers (SSNs) of employees, as well as the Employer Identification Numbers (EINs) of employers. Accurate identification is crucial for both the IRS and employees.
• Part II: Offer of Coverage – Details the health coverage offered to each employee, including the lowest-cost monthly premium for self-only coverage and any applicable safe harbor codes, which indicate affordability based on wages or household income.
• Part III: Covered Individuals – For employers offering self-insured plans, this section lists all individuals covered under the plan, including employees and their dependents, along with the months of coverage.

2025 Filing Deadlines

Employers must submit Form 1095-C to the IRS and furnish copies to employees by the following deadlines:

• Employee Deadline: Provide Form 1095-C to employees by March 3, 2025.
• IRS Paper Filing Deadline: If filing by paper, submit Forms 1095-C and the transmittal Form 1094-C by February 28, 2025.
• IRS Electronic Filing Deadline: For electronic filing, submit by April 1, 2025.

Note: Employers with 10 or more returns must file electronically.

Ensuring ACA Compliance

Compliance with the ACA involves more than just filing forms; it requires understanding the employer shared responsibility provisions.

Offering Minimum Essential Coverage

ALEs must offer minimum essential coverage that is affordable and provides minimum value to at least 95% of their full-time employees and their dependents. Failure to meet this requirement can result in significant penalties, especially if a full-time employee receives a premium tax credit.

Affordability and Minimum Value Standards

• Affordability: Coverage is affordable if the employee’s contribution for self-only coverage does not exceed a specified percentage of their household income.
• Minimum Value: A plan meets minimum value if it covers at least 60% of the total allowed cost of benefits expected under the plan.

Penalties for Non-Compliance

Non-compliance can lead to two types of penalties:

1. Penalty for Not Offering Coverage: If an ALE fails to offer coverage to at least 95% of full-time employees and their dependents, and if any full-time employee receives a premium tax credit, the employer may face a penalty.
2. Penalty for Offering Unaffordable or Insufficient Coverage: Even if coverage is offered, if it’s deemed unaffordable or doesn’t provide minimum value, and if a full-time employee receives a premium tax credit, the employer may incur a penalty.

Common Compliance Pitfalls and How to Avoid Them

1. Missing Deadlines: Set calendar reminders or use payroll/tax software to track due dates.
2. Incorrect Employee Data: Verify names, SSNs, and coverage details before submission.
3. Incomplete Offer of Coverage Section: Ensure all codes in Part II accurately reflect the health plan offered.
4. Properly filling out Form 1095-C ensures employees receive the necessary data to complete their tax returns accurately—especially if they qualify for any premium tax credits.
5. Failing to Report Self-Insured Plans: If your company offers a self-insured plan, be sure to complete Part III of Form 1095-C.

Best Practices for Filing Form 1095-C

To navigate the complexities of Form 1095-C and ensure compliance, consider the following best practices:

Maintain Accurate Employee Records

Ensure records of employee classifications, hire dates, termination dates, and hours worked are precise and up-to-date.

Collaborate with Payroll and HR Departments

Effective communication between departments ensures that all necessary data is collected and reported accurately.

Utilize Reliable Software Solutions

Invest in ACA reporting software to streamline the process, reduce errors, and ensure timely submissions.

Stay Informed on Regulatory Changes

Regularly consult the IRS website and subscribe to updates to stay informed about modifications that may affect your reporting obligations.

Conduct Regular Compliance Audits

Periodic internal reviews can help identify discrepancies and areas for improvement, ensuring ongoing compliance with ACA requirements.

FAQs About Form 1095-C for Employers

Do I need to file Form 1095-C if I offer health coverage to all employees?

Yes, even if you offer coverage to all eligible employees, Form 1095-C must be filed for each full-time worker to document the coverage offered.

What are the penalties for failing to file Form 1095-C?

The IRS imposes penalties for non-compliance:

• Failure to file or furnish Form 1095-C: $310 per return (up to $3,783,000 annually).
• Intentional disregard of filing requirements: There is no maximum cap on penalties.

Can I correct errors after submitting Form 1095-C?

Yes. If you discover an error after submission, you must file a corrected Form 1095-C as soon as possible to avoid penalties.

Navigating the Path to Compliance

Filing Form 1095-C is a critical component of employer ACA compliance. By understanding your responsibilities and implementing best practices, you can streamline the process, reduce errors, and avoid penalties.