Do I File a 1095-C?
As a business owner or employer, you are required to report certain information to the Internal Revenue Service (IRS) each year. One of the most critical reports is the 1095-C, also known as the Translucent Reporting of Employer-Provided Health Coverage. In this article, we’ll help you determine if you need to file a 1095-C and what you need to know to do so correctly.
Who Must File a 1095-C?
To file a 1095-C, you must meet the following criteria:
• A. Applicability: You are an applicable large employer (ALE), meaning you have at least 50 full-time employees (FTE) on a business day during the calendar year.
• B. Employer-Provided Health Coverage: You offered health coverage to your employees during the calendar year.
If you meet these criteria, you must file a 1095-C report for each employee who was a full-time employee (FTE) for one or more days during the calendar year and for whom you offered health coverage.
Filing Requirements for 1095-C
The 1095-C report must be filed with the IRS by February 28th (March 31st for paper filers) of each year. You must also provide a copy of the 1095-C to each FTE employee by January 31st of each year.
What Information is Required on the 1095-C?
The 1095-C report requires you to provide the following information:
• Part I: Information about the employer (your business) and its health coverage.
• Part II: Information about each FTE employee who was offered health coverage.
• Part III: Information about each FTE employee who was offered a plan that is considered a HRA (Health Reimbursement Arrangement) or a QSE (Qualified Small Employer).
Key Points to Consider
Before filing your 1095-C, make sure you understand the following:
- Offer of Coverage: You must offer health coverage to at least 95% of your FTE employees to avoid a potential penalty. This means you cannot have more than 5% of your employees opt-out.
- Month-by-Month Qualifying Offer: You must offer a qualifying offer of coverage (QOC) on a month-by-month basis. A QOC is a health plan that meets the guidelines set by the Affordable Care Act (ACA).
- Individual Rate of Pay or Imputed Income: You must determine the FTE employee’s individual rate of pay or imputed income to determine the QOC.
Form 1095-C Filing Options
You can file Form 1095-C electronically or manually. If you file electronically, you’ll need to use an approved e-file system, such as the IRS Free File Fillable Forms or a qualified electronic filing (QEF) system. If you file manually, you’ll need to use Form 1095-C (PDF) and prepare a mailing with the necessary information.
Penalties for Non-Compliance
Failing to file a 1095-C report or providing incorrect information can result in the following penalties:
- $100 to $100,000 per employee, per day: For failure to file a 1095-C report or provide incorrect information.
- $2,500 per employee: For failure to provide a copy of the 1095-C to each FTE employee.
Conclusion
Filing a 1095-C report is a critical responsibility for applicable large employers. It’s essential to understand the requirements, including the must-haves, what information to report, and what to avoid. Be sure to plan ahead, follow the guidelines, and complete the report accurately to avoid potential penalties.
Additional Resources
- IRS Publication 517 Reporting of Employer-Provided Health Coverage
- Instructions for Form 1095-C Form 1095-C Instructions
By understanding the requirements and best practices for filing a 1095-C, you can ensure compliance with the IRS regulations and avoid potential penalties. If you’re not sure whether you need to file a 1095-C or need help with the process, consult with a qualified tax professional or the IRS directly.