Form 1095-C is an important document related to employer-sponsored health insurance and the Affordable Care Act (ACA). Employees who work for certain large employers may receive this form each year, while employers have reporting responsibilities associated with preparing and submitting it.

Although Form 1095-C may seem complicated because it contains several codes and sections, understanding its purpose can make it much easier to review. Whether you are an employee who received a Form 1095-C or an employer responsible for ACA reporting, knowing what the form means can help you avoid confusion and potential reporting errors.

What Is Form 1095-C?

Form 1095-C is officially known as Employer-Provided Health Insurance Offer and Coverage. Applicable large employers (ALEs) use this form to report information about health coverage offered to certain full-time employees.

Under the ACA, an applicable large employer is generally an employer that had an average of at least 50 full-time employees, including full-time equivalent employees, during the preceding year.

The form provides information about whether an employer offered health insurance coverage, the type of coverage offered, and the months when the offer applied. Depending on the employer's health plan, it may also provide information about individuals who were actually covered.

Employers generally furnish copies of Form 1095-C to applicable employees and submit the required information to the IRS.

Who Receives Form 1095-C?

Form 1095-C is generally provided to employees who were considered full-time employees for at least one month during the year by an applicable large employer.

Importantly, receiving a Form 1095-C does not necessarily mean that an employee enrolled in the employer's health insurance plan. The form can report that an employer offered coverage even when an employee declined that coverage.

For example, an employee may receive Form 1095-C showing that affordable employer-sponsored coverage was offered even though the employee chose not to enroll.

Employees should therefore understand that the form primarily documents an employer's offer of coverage and, in applicable circumstances, information about actual coverage.

What Information Is Included on Form 1095-C?

Form 1095-C contains several sections, each serving a specific purpose. Understanding these sections can make reviewing the form much easier.

Part I: Employee and Employer Information

Part I contains basic identifying information for both the employee and employer.

This may include:

  • Employee's name and address
  • Employee's Social Security number or other identifying information
  • Employer's name and address
  • Employer Identification Number (EIN)

Employees should review this information carefully. If the name, address, or other important identifying information is incorrect, they should contact their employer or benefits department.

Part II: Information About the Employer's Offer

Part II is one of the most important sections of Form 1095-C. It provides information about the health coverage offered by the employer.

Line 14 contains codes that identify the type of health coverage offered for each month. The code can indicate whether coverage was offered to the employee, spouse, dependents, or a combination of these individuals.

Line 15 may show the employee's share of the lowest-cost monthly premium for self-only coverage. This amount can help explain the employer's coverage offer.

Line 16 contains codes that provide additional information about the employee's coverage status or why the employer may not have been subject to an employer shared responsibility payment for a particular month.

Because an employee's circumstances can change throughout the year, the codes reported on the form may differ from one month to another.

Part III: Covered Individuals

Part III is generally completed when an employer sponsors a self-insured health plan and is reporting information about individuals who were actually enrolled in coverage.

This section can include the names and identifying information of covered individuals, along with the months in which they had coverage.

Not every Form 1095-C will contain information in Part III.

Do Employees Need Form 1095-C to File Taxes?

In general, employees do not need to attach Form 1095-C to their federal income tax return.

However, employees should keep the form with their important tax and financial records. It provides documentation about employer-sponsored health coverage and may be useful if questions arise regarding health insurance coverage.

Employees should also review the information on the form for accuracy. If something appears incorrect, they should contact the employer that issued the form.

What Are Employers' Responsibilities?

Employers that are subject to ACA reporting requirements have several responsibilities related to Form 1095-C.

They generally need to determine which employees meet the applicable reporting criteria, collect accurate information about offers of coverage, complete the required forms, furnish them to employees, and submit the required information to the IRS.

Accurate recordkeeping is essential. Employers may need to coordinate information from payroll, human resources, benefits administration, and insurance systems.

Employers should also review the latest IRS instructions each year because filing procedures, electronic filing requirements, deadlines, and other rules can change.

Common Form 1095-C Errors

Form 1095-C reporting can become complicated when employees change jobs, move between full-time and part-time status, take leave, or experience changes in health coverage.

Some common mistakes include:

  • Entering incorrect employee information
  • Reporting an incorrect coverage code
  • Using the wrong monthly premium amount
  • Reporting coverage for incorrect months
  • Misclassifying an employee's status
  • Missing applicable filing deadlines
  • Failing to correct errors after discovering them

Employers can reduce the risk of errors by maintaining accurate records throughout the year rather than waiting until the reporting deadline.

What If Form 1095-C Contains an Error?

If an employee finds an error on their Form 1095-C, they should generally contact the employer, payroll department, or benefits administrator that issued the form.

The employer can review the information and determine whether a corrected Form 1095-C is necessary.

Employees should not attempt to alter the form themselves. If an error could affect a tax-related matter or the employee's broader tax situation, consulting a qualified tax professional may also be appropriate.

Form 1095-C vs. Forms 1095-A and 1095-B

The different Form 1095 series can be confusing because each form relates to health coverage but serves a different purpose.

Form 1095-A is generally issued for health insurance purchased through a Health Insurance Marketplace. Form 1095-B is used by certain health insurance providers and other entities to report information about minimum essential coverage.

Form 1095-C, on the other hand, is primarily associated with applicable large employers and employer-sponsored health coverage.

Knowing which form applies to your situation can help you understand the health insurance information included with your tax records.

Why Form 1095-C Matters

For employees, Form 1095-C can provide a useful record of the health coverage offered by an employer. Reviewing the form can help employees identify potential errors and understand the coverage information reported about them.

For employers, accurate Form 1095-C reporting is an important part of ACA compliance. Incorrect or incomplete reporting can create unnecessary administrative work and may result in compliance concerns.

That is why employers should establish reliable processes for tracking employee status, coverage offers, enrollment information, and other data throughout the year.

Final Thoughts

Form 1095-C is an important ACA reporting document that provides information about employer-sponsored health insurance offers and, in certain circumstances, actual coverage. While employees generally do not need to attach it to their federal tax returns, they should review and retain it for their records.

Employers, meanwhile, should understand their ACA reporting responsibilities and ensure that the information reported on each form is complete and accurate.

Because ACA rules and IRS reporting requirements can change, employers and employees should rely on current IRS guidance and seek professional tax advice when they have questions about their specific circumstances.