Form 1095-C is used by Applicable Large Employers (ALEs) to report health coverage offers and enrollment information for each employee who was full-time for at least one full calendar month during the reporting year. It provides the IRS with employee-level data used to determine potential employer shared responsibility (“employer mandate”) penalties and to verify employees’ eligibility for premium tax credits through the Health Insurance Marketplace (Exchange).
Unlike Form 1094-C, Form 1095-C must be provided to both the IRS and employees. Employers must:
- File copies with the IRS (electronically for 10+ returns), and
- Furnish a copy to each applicable employee by the annual furnishing deadline
Key Components of Form 1095-C
Part I – Employee and Employer Information
Captures basic identifying information for the employee and the employer.
- Lines 1–6: Employee name, SSN, and address.
- Lines 7–13: Employer name, EIN, address, and contact telephone number.
- This section ensures the IRS can match the form to the correct employee and ALE member.
Part II – Employee Offer and Coverage
This is the core of Form 1095-C — it reports what the employer offered, whether the employee enrolled, and how affordability was determined.
- Line 14 – Offer of Coverage
- Uses specific IRS indicator codes (Code Series 1: 1A–1U) to describe the type of coverage offered to the employee, spouse, and dependents each month (or “All 12 Months”).
- Codes distinguish between minimum essential coverage (MEC), minimum value (MV), and who was offered coverage.
- Line 15 – Employee Required Contribution
- Reports the employee’s share (contribution) of the lowest-cost monthly premium for self-only coverage that provides minimum value that was offered by the ALE.
- This amount is not the employee’s actual premium or contribution for the plan they elected. It also does not include any amounts attributable to spouse or dependent coverage. It is for the lowest-cost, ACA compliant plan offered by the ALE.
- The IRS uses this figure to assess affordability for employer mandate penalty purposes and to determine an employee’s premium tax credit eligibility.
- Line 15 must be completed if Line 14 uses certain offer codes (e.g., 1B, 1C, 1D, 1E).
- Line 16 – Section 4980H Safe Harbor / Other Relief
- Uses IRS indicator codes (Code Series 2: 2A–2I) to report why a penalty may not apply for a given month (e.g., employee not employed, in a waiting period, enrolled, or affordability safe harbor applied [employee waived]).
- Critical for avoiding employer mandate penalty assessments.
Part III – Covered Individuals (Self-Funded or Level-Funded Plans Only)
If the ALE sponsors a self-insured health plan, this section must list all individuals (employee and dependents) who had Minimum Essential Coverage (MEC) under that plan for one or more months of the calendar year.
- Includes the name, SSN (or date of birth if SSN is unavailable), and the months of coverage for each covered individual.
- This information allows the IRS to verify compliance with the individual mandate for federal purposes.
This section only applies to self-insured or level-funded plans. Fully insured ALEs do not complete Part III, as the carrier reports actual coverage on Form 1095-B.
Note: Employers with self-funded and level-funded plans generally have additional reporting obligations to certain states with individual mandates (e.g., California, New Jersey, Massachusetts, Rhode Island, and Washington D.C.). In California, for example, employers must file their coverage data with the Franchise Tax Board (FTB) to comply with state-level individual mandate reporting. Nevada, along with most other states, does not have a state individual mandate.
Practical Tips
- Accuracy Matters: Lines 14–16 drive IRS penalty assessments. Miscoding can trigger unnecessary 226J penalty letters and potential noncompliance penalties.
- Timelines: Furnish employee copies and file with IRS by the required deadlines.
- Self-Funded & Level Funded: Ensure Part III is completed correctly.
- Alignment with 1094-C: Employee-level data must align with employer-level reporting on Form 1094-C (e.g., counts, offer rates).
- Annual Updates: IRS codes and instructions are updated yearly — always use the correct reporting year’s instructions.
Important Advisory for Brokers – IRS Forms Are Tax Filings
Understanding ACA reporting requirements is essential, but completing Form 1095-C involves making tax determinations, such as selecting the correct codes, calculating affordability, and determining safe harbor applicability.
These are tax filings submitted directly to the IRS, and Applicable Large Employers should rely on their tax counsel or qualified tax professionals for form preparation and submission.
Health insurance brokers should not prepare or file IRS ACA forms on behalf of employers. Your role is to educate, guide, and flag potential issues — not to act as tax preparers or provide tax advice.