Two things employers need to determine before filling out any ACA forms are:
- If the company is an Applicable Large Employer (ALE) Member
- If the company is providing self-insured or fully-insured medical coverage
Form 1095-C is only required from Applicable Large Employers. An organization becomes an ALE once it employs 50 full-time employees (an employee must average working 30 hours a week to be classified as full-time) or full-time equivalents (multiple part-time employees whose hours average the full-time threshold of 30 hours.). The following information does not apply if you are not an ALE.
Background of the 1095-C
After all the confusion surrounding the implementation of Affordable Care Act regulations, Form 1095-C was developed to concisely report the employer's offer of health coverage and must be filed with the IRS. It is supplied to all full time employees and those enrolled in self-insured health coverage.
Which part of the form is filled out depends on whether the company offers self-insured or fully-insured medical coverage:
The first section of the document contains demographic information about the Employee and the ALE.
- Line 7 - Note this name must be the legal name registered for the ALE's Employer Identification Number (EIN).
- Line 9 - The address must be the address registered for the ALE's Employer Identification Number (EIN) which is also required on the employer's 1094-C Form.
Part II - Employee Offer and Coverage
Section 2 has less words, but contains complex calculations for the form. These rows of boxes tell the IRS three things:
- Line 14 - Whether or not the employer offered health coverage & to whom the coverage was offered.
- Line 15 - Amount the employee would have paid for the lowest-cost, self-only monthly premium offered by the employer.
- Line 16 - Whether the employee enrolled in coverage and if not, what Safe Harbor used to determine if the plan was affordable.
Note that lines 14 & 16 must be completely filled out. If a code applies to all 12 months - then the code can solely be entered in the 1st column, "All 12 Months". Lines 14, 15 and 16 are completed independently of each other.
Part III - Covered Individuals
Thankfully there are no more codes in section 3. This section simply details all individuals that are covered in a self-insured medical plan during the calendar year. This includes the employee, their spouse, and all dependents. A checkmark should appear for every month the individual had coverage - even months where the individual only had partial coverage. A Taxpayer Identification Number (TIN) should be provided for all covered individuals in this section.
For more information on Form 1095-C, visit https://www.irs.gov/instructions/i109495c.