Form 1095-C is a tricky one. At first glance, it may be overwhelming, especially because employers must complete one of these forms for each of their full-time employees.
In this article, we are going to provide the Form 1095-C instructions that take the risk out of the filing. We are breaking down the Form 1095-C part by part and clearing up the misconceptions you may have.
What is the purpose of Form 1095-C?
The purpose of Form 1095-C is deeply rooted in the Affordable Care Act (ACA). When the ACA was written into law, applicable large employers were required to offer minimum essential coverage to their employees. To enforce this, the Forms 1095 were created so that this coverage information could be collected and verified by the IRS.
Who should file Form 1095-C?
You may have heard the term Applicable Large Employers. These are businesses that employ 50 or more full-time and full-time equivalent employees. Businesses of this size must complete annual IRS reporting using Form 1095-C and distribute copies of this form to their employees as well.
Now that we have recapped the basics of ACA reporting, let’s go more in-depth about the 2020 Form 1095-C instructions for an efficient filing process. This form has 3 parts total, let’s first explore Part 1 of the 1095-C.
How to complete Part I of Form 1095-C?
For those of you who are visual learners, much like myself, here is what Part I of the form actually looks like. There are a total of 13 data fields, about half of them are related to the employer, so that will stay the same on every copy of the 1095-C that you file. The other half is specific to the employee and will be different on each 1095-C that you complete.
Form 1095-C Part – I
These are the following information fields that must be filled out regarding your employee:
City of residence
State of residence
County and zip code.
The following lines refer to the employer:
The phone number of the responsible person.
The city where your business is located
The state in which you business operates
The county and zip code where the business operates.
There you have it, Part I is simple and straightforward, just be vigilant when filing in each employee’s information. This is where mistakes can happen, like providing an incorrect TIN or a misspelling in the employee’s name.
Also note that if you are submitting a corrected form to the IRS, you must check the box to indicate this.
Now, we’re heading forward into Part II, hold on, it’s about to get a little more complicated.
How to complete Part II of Form 1095-C
This section of the form is all about the offer of coverage, whether your employee accepted or not, you will need to complete the form for every employee who was eligible to receive an offer.
Before getting into Lines 14-17, you will need to enter the Employee’s Age on January 1st (only when you are entering ICHRA codes 1L through 1S on Line 14 of Form 1095-C), and the Plan Start Month.
Now, let’s talk about Line 14, this is one of the most important and difficult lines of Form 1095-C. In Line 14 you will need to indicate the Offer of Coverage, using the Code Series 1. There are 19 codes in total. You will need to enter the appropriate code for each month of the year.
In Line 15 you must indicate the Employee Required Contribution. According to the IRS Form 1095-C instructions, “Complete line 15 only if code 1B, 1C, 1D, 1E, 1J, 1K, 1L, 1M, 1N, 1O, 1P, or 1Q, is entered on line 14 either in the “All 12 Months” box or in any of the monthly boxes.” If you have indicated one of these codes, this amount is generally the portion of the monthly premium that the employee is responsible for.
Line 16 is another difficult line, this is where safe harbors come into play. If you are using a safe harbor code to confirm the affordability of your group health insurance coverage, you will need to indicate this using the Code Series 2.
These codes can also be found on our 1095 Code Sheet. Access it and get to know what each code represents.
On Line 17, you only need to indicate your employee’s ZIP Code If you are offering an ICHRA plan (entered codes 1L-1Q on Line 14).
Now it’s time to tackle Part III, the final portion of Form 1095-C!
How to complete Part III of Form 1095-C?
Part III only needs to be completed if you are an applicable large employer and offering self-insured or self-funded health insurance coverage to employees.
In this portion of the form, you will need to enter information for the employee and any spouse or dependents that are covered under the plan. You will need to enter their SSN or date of birth. You will also need to check the box for every month of the year that they were covered. If they were covered for the entire year, check the box under column (d) to indicate covered all 12 months.
If you provided your employees with fully-funded health insurance coverage, you can skip Part III.
Still not sure how to prepare the 1095-C Forms?
Reach out to the experts at ACAwise. ACAwise, has a team of experts who not only facilitate your filing ACA Forms 1095-B/C electronically with the IRS, but also generate your ACA codes completely by using your payroll, employee, and health 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. Plus, we file returns with the states that mandate ACA reporting.
Prepare yourself for the 2020 year-end reporting. Get Started Today with ACAwise!