An Employer’s Guide to IRS Form 1095-C

Here is the key information employers should know about Form 1095-C.
Form 1095-C for 2021

Form 1095-C is a complex form that many employers find to be daunting, as it requires a knowledge of codes that represents the offer of coverage to be reported with the IRS. The coverage codes vary for each individual based on the plan they have been provided.

There is no reason to fear to prepare Form 1095-C, as it just takes a little research to become more comfortable with it.

That’s why we are bringing you a complete guide to getting started! Here is the key information that employers should know before tackling their ACA reporting this year.

What is the employer mandate ACA Reporting?

Under section 6056 of the IRS code, applicable large employers are obligated to file 1095-C with the IRS as well as distribute recipient copies to their employees.

The reason that these employers are required to file Form 1095-C is that the IRS mandates to offer health insurance that meets the minimum essential coverage guidelines set in place by the Affordable Care Act.

This is the basis for the employer’s ACA reporting requirements. Under section 6056 of the IRS code, applicable large employers are obligated to file the Form 1095-C with the IRS as well as distribute recipient copies to their employees. 

What is Form 1095-C?

Form 1095-C is designed by the IRS to capture enough information about the employer’s offer of health insurance coverage and to verify that these employers are in fact meeting the requirements for minimum essential coverage.

Who must file Form 1095-C?

Applicable Large Employers (ALEs) with 50 or more full-time or full-time equivalent employees are required to file Form 1095-C

An ALE that sponsors a self-insured health plan must file Form 1095-C to report the information about each individual enrolled in such coverage.

An employer with less than 50 employees that offer employer-sponsored, self-insured health coverage should not file Forms 1094-C and 1095-C, but should instead file Forms 1094-B  to report the information about each individual enrolled in such coverage.

Form 1095-C Line 14 and 16 Codes

The ACA indicator codes are used to indicate different coverage situations to the IRS. These codes must be used on the following lines of the form.

Line 14, Offer of Coverage Codes

This line reports the offer of coverage from the employer to the employee. This is where the employer must prove that they made an offer of health insurance to all qualifying full-time employees. 

Click here to learn more about Line 14 codes (Code 1 Series).

Line 16, Safe Harbor Codes

Line 16 is designed to report information about the nature of the employee’s health insurance. This is where the IRS will look to make sure that the employer is providing health insurance that the IRS deems affordable. The health insurance plan must meet the Minimum Essential Coverage (MEC) requirements set in place by the IRS.

This is the line where Safe Harbours come into play. A Safe Harbour is a method by which employers can prove that the health insurance coverage that they offer to their employees is in fact affordable. Under the ACA, the IRS requires that health insurance can be no more than 9.86% of an employee’s salary.

Click here for a complete list of the ACA codes that are required to be reported on line 14 and line 16 of Form 1095-C.

What are the changes to Form 1095-C for the 2020 Tax Year? 

Given the many changes to the Affordable Care Act over the years, it is not surprising that the Form 1095-C undergoes some revisions as well.

Reporting of ICHRA Coverage 

One of the newest updates to the ACA is the inclusion of ICHRAs or Individual Coverage Health Reimbursement Arrangements effective January 1, 2020. 

This type of plan allows employers to offer their employees tax-free reimbursements for healthcare-related costs as opposed to traditional group healthcare plans. While employers are now able to offer ICHRAs, they must still meet the ACA affordability requirements set in place by the IRS. 

New Codes Added to Form 1095-C

There are specific changes to Form 1095-C to reflect the reporting of ICHRAs. First, there is an entirely new line that captures the employee’s zip code, Line 17. 

Employers will also need to include the ages of each employee in the Plan Start Month for all plans, not just the ICHRA. 

In addition to this, there is an entirely new set of ACA codes (Code 1L -1S) that refer to the ICHRA coverage. Know more about the new codes to report ICHRA coverage.

What are the deadlines associated with Form 1095-C?

Usually, Form 1095-C has three different deadlines, 

  • Recipient Copy Deadline – The (recently extended) deadline to distribute recipient copies- March 2, 2021
  • Paper Filing Deadline – The deadline to paper file with the IRS- February 28, 2021
  • E-filing Deadline – The deadline to e-file 1095-C with the IRS- March 31, 2021

Apart from these deadlines, certain states also mandate the filing of health care coverage with the states. Know more about the states that require the filing. 

What information is required to file Form 1095-C?

To complete the 1095-c filing correctly the following information must be reported:

  • The name, address, and SSN of the covered individual.
  • The name, address, EIN, and contact info of the plan provider.
  • The offer of coverage code for each recipient/employee, broken down by month
  • The recipient/employee’s premium share of coverage, by month.
  • The employee’s age, plan start month, and Zip Code (For ICHRA Reporting).
  • Any safe harbor relief codes that are applicable
  • The covered individual’s spouse and dependent(s) information, if applicable (name, SSN or DOB, and months covered)

Note: The IRS suggests employer file ACA 1095-C Forms electronically for quick processing of returns. And also, the IRS mandates electronic filing for those who are reporting more than 250 forms.

Filing 2020 Form 1095-C

While understanding the basics of Form 1095-C is a must for employers, however, there is nothing wrong with enlisting the help of an expert. In fact, that’s the best option for employers with all levels of experience with ACA reporting

ACAwise, is that expert. Our team can not only facilitate your filing electronically with the IRS, but we can also generate your ACA codes completely by using your payroll and benefits records. There’s no need to spend stressful hours printing and mailing your recipient copies either, let ACAwise handle this for you! We are able to validate your employees’ addresses against the USPS database. And we do file returns with the state that mandates the filing. 

ACAwise has great features and benefits for all employers, learn more about our services today!

Ready to File your 2021 ACA Form 1095-C?


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