Tax season is right around the corner. For small businesses that offer health insurance to their employees, this means it’s time to prepare the necessary forms and documentation.
While there are multiple tax-related forms associated with health insurance, two of the most important—and often the most complex—are Forms 1094-C and 1095-C. These forms are essential for ensuring compliance with the Affordable Care Act (ACA) and for helping employees accurately file their taxes.
In this blog, we will explain a few key points about these forms, their significance, and what to do if you still have questions.
What Is a 1094-C?
1094-C Forms are for Applicable Large Employers (or ALEs for short). An ALE is an employer with an average of at least 50 full-time employees (including full-time equivalent employees) during the preceding calendar year.
The purpose of filing a 1094-C form is to:
- Report a summary of each employee’s health insurance offerings
- Transmit Form 1095-C to the IRS (see more information on this below)
- Determine whether they owe an employer shared responsibility payment
The form provides key details, including:
- The total number of employees and full-time employees
- Confirmation of whether coverage was offered to at least 95% of full-time employees
- The total number of forms filed
- Certification of whether the employer is part of an aggregated employer group (i.e. related businesses under common ownership)
Employers seeking 1094-C instructions should carefully review IRS guidelines to ensure proper completion and submission.
What Is a 1095-C?
1095-C Forms are a document that ALEs must distribute to their employees and the IRS. It includes information about the health insurance coverage offered to an employee by the ALE. For example:
- The months that coverage was offered
- The type of coverage provided
- The lowest-cost premium available to the employee
- Whether the coverage met the ACA’s minimum essential coverage (MEC) and affordability requirements
Note: Form 1095-C should not be confused with Form 1095-A, which is used for Marketplace health insurance plans. The 1095-C is specifically for employer-provided coverage.
Recent changes under the Paperwork Burden Reduction Act have modified reporting requirements for Form 1095-C. Employers are no longer required to automatically send 1095-C Forms to each employee unless requested.
Employers must provide clear and prominent notice of an individual’s right to request a copy of the form and instructions for how to request a physical copy. This change aims to reduce administrative burdens for businesses while still ensuring that employees have access to their health coverage documentation when needed.
When Do I Need To Complete These Forms?
For calendar year 2024, Forms 1094-C and 1095-C are required to be filed by February 28, 2025, or March 31, 2025, if filed electronically. Additionally, employers must furnish Form 1095-C to their employees by March 3, 2025. Ensuring these deadlines are met is crucial to avoiding potential penalties from the IRS.
Understanding and filing tax forms can be time-consuming and complex but a health insurance broker can provide invaluable assistance. Brokers can help small businesses by:
- Ensuring compliance with ACA regulations
- Assisting with accurate data collection and form preparation
- Advising on health plan options that align with business needs and employee affordability
- Helping businesses avoid costly penalties due to filing errors
If your business needs guidance on ACA compliance, tax forms, or employee health benefits, Health & Benefits Partners is here to help. Contact us today to ensure your filings are accurate and stress-free.
