Form 1095-C: Definition, Uses, Tax Filing Requirements

What is Form 1095-C?

Form 1095-C, titled "Employer-Provided Health Insurance Offer and Coverage," is a tax document that Applicable Large Employers (ALEs) use to report health insurance offers and coverage details to the IRS and their employees. It helps verify compliance with the Affordable Care Act (ACA) employer shared responsibility rules and affects employee eligibility for premium tax credits.

This form is essential for ALEs with 50 or more full-time employees and outlines the months of coverage offers, enrollment status, and affordability information related to employer health plans. Understanding Form 1095-C is important for managing your tax obligations and health coverage documentation, especially if you are involved with a C-corporation.

Key Characteristics

Form 1095-C includes several key features that define its purpose and use:

• Issuer: Filed by ALEs, including large employers like Delta, who must report to the IRS and provide it to full-time employees.
• Coverage Details: Lists months when coverage was offered or declined and shows lowest employee premium costs for self-only coverage.
• Compliance Codes: Uses specific codes to indicate offers, affordability, and minimum value of coverage.
• Employee Reach: Provided to all full-time employees regardless of whether they enrolled, ensuring transparency in employer coverage offers.
• IRS Use: Supports IRS enforcement of ACA rules and helps determine employer penalties or employee eligibility for tax credits.

How It Works

ALEs prepare Form 1095-C annually to document health insurance offers made to full-time employees as part of ACA compliance. Employers submit a summary transmittal (Form 1094-C) to the IRS and provide Form 1095-C to employees by March 31, detailing coverage offers for each month worked.

Employees use this form mainly for verifying eligibility when claiming premium tax credits on their tax returns, though they do not need to attach it to their return. The form also helps distinguish employer offers from actual enrollment, which is reported on separate forms like 1095-B. This reporting process aligns with broader concepts such as an employee’s ability to pay taxation.

Examples and Use Cases

Form 1095-C is commonly issued by large employers to meet regulatory requirements and support employee tax filings:

• Airlines: Companies such as Delta and American Airlines issue these forms annually for their full-time employees to document health coverage offers and affordability.
• Self-Insured Employers: Employers who self-insure use Form 1095-C to verify minimum essential coverage for employees and dependents under ACA mandates.
• Employees Reconciling Credits: Workers who decline employer coverage but purchase Marketplace insurance use the form to reconcile premium tax credits, a process linked to healthcare stock sector trends affecting employer benefits.

Important Considerations

It’s important to keep Form 1095-C for your records, as it verifies coverage offers but is not required to be attached to your tax return. If you receive premium tax credits, this form helps reconcile eligibility and avoid penalties. Employers who fail to file or provide accurate forms may face fines under ACA regulations.

Additionally, staying informed about large-cap company policies, such as those from major employers featured in best large-cap stocks, can provide insights into employer health coverage trends and obligations. Understanding Form 1095-C is a key step in managing your health insurance documentation and tax responsibilities effectively.