A common question I often received from my clients is, "What is the difference between IRS Forms 1094-C and 1095-C and does my company need to complete them?" I wanted to share some useful information with you that will help clarify which form to use and if you are required to complete them. IRS Forms are filed by employers that are required to offer health insurance coverage to their employees under the Affordable Care Act, also known as Obamacare. The main difference between them is that the 1095-C provides information about health insurance and is sent to both employees and the IRS, while the 1094-C acts as a cover sheet about the 1095-C and is sent only to the IRS. Think of them as the W-2 and W-3 for health insurance.
For the calendar year 2015, Forms 1094-C and 1095-C are required to be filed by February 29, 2016, or March 31, 2016, if filing electronically.
This was not a requirement for the calendar year 2014, but is a requirement for calendar year 2015.
Your payroll company will complete the forms and filing on your behalf – contact them ASAP to purchase this service prior to November 2015.
The Role of the 1095-C
The Affordable Care Act requires employers with at least 50 full-time employees to offer their employee health insurance. And each year, those employers must send a statement --Form 1095-C to all employees eligible for coverage.
The statement provides details about:
The coverage offered to the employee
The lowest-cost premium available to the employee
The months of the year when the coverage was available
All employee eligible for coverage should get a 1095-C, regardless of whether they actually participate in the employer's health plan. The forms became mandatory with the 2015 tax year.
Where the 1094-C fits in
Employers don't send 1095-C forms just to their workers. They also have to send them to the IRS. When so file Form 1094-C.This form is essentially a “cover sheet” for the 1095-C forms. It provides information about:
the employer -- including address, phone number, employer identification number
how many employees it has
the name of a contact person
and how many 1095-C forms are being sent
Why the IRS needs the 1095-C
The IRS needs information from 1095-C forms because it has a central role in enforcing the Affordable Care Act. Companies that are required to offer insurance but don’t, may have to pay a penalty. By collecting 1095-C forms, the IRS can track who is and isn't making coverage available to workers. Meanwhile, the health care law also requires most people to have health insurance, and it provides financial assistance to some people who do not have an opportunity to get coverage through an employer. Information from the 1095-C tells the IRS who has access to employer-sponsored health insurance and who doesn’t.
According to the IRS, employers must send employees their 1095-C forms by the end of January each year. Information must be sent to the IRS by the end of February if paper filed, or by the end of March if the forms are filed electronically.
Employers with fewer than 250 forms to send to the IRS can file paper 1095-C forms, accompanied by a paper 1094-C. They can also file electronically. Employers with 250 or more forms must transmit the information electronically.
The Role of the 1094-B and 1095-B
For More Information
Additional details on the information reporting requirements for providers of minimum essential coverage, including self-insured employers, are available in IRS Questions and Answers. More information about the information reporting requirements for large employers subject to "pay or play" is available in separate IRS Questions and Answers.
I hope you found this information useful. Get your 2015 Pay or Play Information Reporting Checklist now, which features key steps and guidelines to help complete IRS Forms 1094-C and 1095-C.