What Is Form 1095-C and Who Needs to File It?
- May 19, 2025
- Posted by: Sujal1
- Category: Tax Documents
When tax season rolls around, employers, employees, and tax professionals often encounter various forms mandated by the IRS. One such form is Form 1095-C, which plays a crucial role in verifying healthcare coverage for employees under the Affordable Care Act (ACA).
This guide dives deep into what is Form 1095-C. , who needs to file it, key components, deadlines, penalties for non-compliance, and best practices for accurate filing.
What is Form 1095-C
Form 1095-C is a tax document used by Applicable Large Employers (ALEs). Typically, businesses with 50 or more full-time or full-time equivalent employees report health insurance coverage details to both the IRS and their employees.
The form ensures compliance with the employer mandate under the ACA, which requires ALEs to offer affordable, minimum essential coverage (MEC) to full-time employees.
Key Components of Form 1095-C
The form is divided into three main sections:
1. Part I – Employee and Employer Information
- Employee’s name, address, and Social Security Number (SSN).
- Employer’s name, Employer Identification Number (EIN), and contact details.
2. Part II – Offer of Coverage
- Indicates whether health coverage was offered each month.
- Specifies if the coverage meets minimum essential coverage (MEC) and affordability standards.
- Includes safe harbor codes (lines 14 and 16) that explain why an employee may or may not have been offered coverage.
3. Part III – Covered Individuals
Lists all individuals (employee, spouse, dependents) covered under the employer’s self-insured health plan.
Who Needs to File Form 1095-C?
Not every employer is required to file Form 1095-C. Here’s a breakdown of who must submit it:
1. Applicable Large Employers (ALEs)
- Employers with 50 or more full-time or full-time equivalent employees in the previous year.
- Must file a separate Form 1095-C for each full-time employee.
2. Self-Insured Employers
If an ALE offers a self-insured health plan, it must complete Part III of the form, detailing covered individuals.
3. Third-Party Administrators (TPAs) & Reporting Responsibilities
While some employers outsource benefits administration to TPAs, the ultimate filing responsibility remains with the employer.
Why Form 1095-C Is Important
Form 1095-C serves multiple critical functions
- IRS Compliance: Proves adherence to ACA employer mandate requirements.
- Employee Tax Reporting: Helps employees confirm they had qualifying health coverage when filing their tax returns.
- Avoiding Penalties: Ensures businesses avoid costly fines for non-compliance.
Penalties for Non-Compliance
Failing to file an accurate and timely Form 1095-C can result in substantial penalties:
- Late Filing Penalty: Up to $310 per form (2024 rates).
- Intentional Disregard: Penalties can escalate to $630 per form.
- Incorrect Information: Even minor errors can trigger fines if not corrected promptly.
The Role of Form 1095-C in ACA Compliance
Form 1095-C is not just another tax document; it serves as a critical tool for enforcing the Affordable Care Act’s employer mandate.
The ACA requires Applicable Large Employers (ALEs) to provide affordable, minimum essential health coverage to their full-time employees or face penalties.
This form helps the IRS verify whether employers are meeting these requirements. For employees, the 1095-C acts as proof of health coverage, which they may need when filing their tax returns.
Without it, employees could face complications when claiming premium tax credits or proving they had qualifying coverage to avoid the individual mandate penalty (where applicable).
Additionally, the data collected from these forms allows the IRS to assess whether employers are adhering to ACA regulations, ensuring fairness in healthcare access across businesses of all sizes.
How to Fill Out Form 1095-C Correctly
To avoid mistakes, follow these best practices:
1. Use Correct IRS Codes (Lines 14 & 16):
Misusing codes is a common error that ensures the proper classification of coverage offers.
2. Verify Employee Information:
Double-check names, SSNs, and coverage months for accuracy.
3. Distribute Copies to Employees on Time:
Send forms by March 1 to avoid penalties.
4. Maintain Detailed Records
Keep documentation for at least three years in case of IRS audits.
Common Challenges in Filing Form 1095-C
Many employers encounter difficulties when preparing Form 1095-C, particularly when determining the correct codes for Lines 14 and 16. Misclassifying coverage offers or affordability safe harbors can lead to errors that trigger IRS penalties.
Another challenge arises with self-insured plans, where employers must accurately list all covered individuals (including dependents) in Part III.
Missing or incorrect Social Security Numbers (SSNs) can also cause filing rejections or delays. To mitigate these risks, employers should implement thorough review processes, utilize IRS guidance, and consider working with benefits consultants or payroll providers who specialize in ACA reporting.
Staying ahead of deadlines and maintaining organized records throughout the year can further streamline the filing process and reduce last-minute errors.
How Medcore Brokerage Simplifies Form 1095-C Compliance
Navigating ACA reporting can be complex, but Medcore Brokerage provides tailored solutions to ensure accuracy and compliance.
Our team assists employers in determining their ALE status, classifying full-time employees correctly, and applying the right IRS codes.
We also help businesses transition to electronic filing if required and provide audit support in case of IRS inquiries.
Beyond Form 1095-C, we offer strategic benefits consulting to optimize healthcare offerings while maintaining affordability under ACA standards.
By partnering with Medcore, employers can turn a cumbersome administrative task into a seamless process, freeing up time to focus on their core business operations while avoiding costly penalties.
Final Thought
What is Form 1095-C?, It is a critical IRS document for Applicable Large Employers (ALEs) to demonstrate ACA compliance.
By understanding its requirements, deadlines, and best practices, businesses can avoid penalties and ensure smooth tax reporting.
Partnering with experts like Medcore Brokerage simplifies the process, allowing employers to focus on their core operations while staying compliant.
Frequently Asked Questions (FAQs)
1. Who receives Form 1095-C?
Full-time employees of ALEs (50+ employees) receive this form.
2. Do small businesses need to file Form 1095-C?
No, only employers with 50+ full-time or equivalent employees must file.
3. What happens if I don’t file Form 1095-C?
Penalties apply, ranging from $310 to $630 per form, depending on lateness.
4. Is electronic filing mandatory?
Yes, if submitting 10 or more forms, electronic filing is required.
5. What if an employee’s information is incorrect?
Employers must issue corrected forms promptly to avoid penalties.
6. Can a Third-Party Administrator (TPA) file Form 1095-C for my business?
TPAs can assist, but the employer remains legally responsible for filing.
