ACA Compliance: Filing IRS Forms 1094-C and 1095-C

Featured Image for ACA Compliance: Filing IRS Forms 1094-C and 1095-C

If your organization has 50 or more full-time employees, you'll need to submit IRS forms 1094-C and 1095-C this tax season in order to comply with the Employer Shared Responsibility provisions of the Affordable Care Act. Each of the two forms serves a different purpose and requires you to share different types of information with the IRS. Although the forms may look like a W2, they're much more complicated, requiring more data from more places.

Here's are some answers to some of the main questions you may have:

Where Can I Find These Two Forms?

Both forms 1094-C and 1095-C are on the IRS website, which also offers instructions for filing the forms, as well as a short brochure designed to help employers understand the reporting requirements.

What Is the Purpose of Each Form? What Will the IRS Do With Them?

These forms are intended to monitor employer compliance with the Affordable Care Act by collecting information about employer-offered health care coverage and employee participation. Form 1095-C is called "Employer-Provided Health Insurance Offer and Coverage." It helps the IRS determine whether you've offered qualified health coverage and, if you have not, helps the IRS calculate tax penalties you'll owe. The form also provides your full-time employees with information they'll need to file their own taxes, giving the IRS enough information to determine whether the employee is eligible for a premium tax credit/subsidy.

Form 1094-C, called "Transmittal of Employer-Provided Health Insurance Offer and Coverage," is a cover sheet that employers must send to the IRS along with each 1095-C form. The 1094-C form asks for aggregate employer-level data.

When Do the Forms Need to be Filed? Do Employers Need to Send Both Forms to the IRS and Their Employees?

Although form 1095-C must be sent both to the IRS and all full-time employees (whether they participate in the employer-offered plan or not), form 1094-C goes to the IRS only and not employees. As for the filing deadlines, for the first year, the IRS announced an automatic extension in the due dates for forms 1094-C and 1095-C. The 1095-C forms for 2015 are now due to individuals by March 31, 2016. Normally, forms 1094-C and 1095-C must be provided to the IRS by February 28th (March 31st, if filed electronically) of the year following the year to which the statement relates. Because of the extension, for calendar year 2015, the 1094-C and 1095-C forms are required to be provided to the IRS by May 31, 2016, or June 30, 2016 if filing electronically. However, always check the IRS website to confirm dates each year.

Note that all employers filing more than 250 1095-C forms must file electronically.

What Information Should Be Included on Forms 1094-C and 1095-C?

Form 1095-C, filed both with full-time employees and the IRS, must include the following:

  • Details about the health insurance coverage offered to the employee.
  • The lowest-priced premium available to the employee.
  • The months of the year when the coverage was available.

Form 1094-C, filed only with the IRS, must include the following:

  • The employer's address, telephone number and employer identification number (EIN).
  • The name of a contact person.
  • How many full-time employees (by month).
  • How many 1095-Cs you've issued.

How Difficult Is Collecting The Data to File These Two Forms? Should My Organization Seek Outside Help?

You'll need to coordinate your compliance efforts with your payroll people and your human resources information system people in order to aggregate the necessary data for these IRS forms. Because of the time-consuming nature of this level of interorganizational coordination, some employers turn to an ACA compliance vendor or a software solution to manage these complicated compliance efforts. These services may save you a lot of valuable time and money but also give you peace of mind that experts are helping to guide your organization through the compliance process.

The ACA is being rolled out gradually, and compliance will become more complex over time. But you can stay ahead of the curve by actively understanding and carrying out each new requirement to the letter of law.