What Form 1095-C Is
Form 1095-C is the employee-level form an Applicable Large Employer (ALE) files for each employee who was full-time for at least one month of the reporting year. It’s filed with the IRS along with Form 1094-C, the employer-level transmittal, or cover sheet.
The IRS uses Form 1095-C to:
- Determine whether an employer mandate penalty may apply
- Check whether employees were eligible for a Premium Tax Credit (PTC)
Unlike Form 1094-C, Form 1095-C also goes to employees. Employers provide a copy to each employee, or make it available on request after posting a notice, as allowed under a 2024 law. See Employer Reporting Overview for deadlines.
At a high level, Form 1095-C shows, month by month:
- What coverage the employer offered the employee, and to which family members
- The employee’s cost (contribution) for the lowest-cost plan offered, at the self-only rate, that provides minimum value
- Whether the employee enrolled, or, if they declined, which affordability safe harbor shows the offer was affordable. Other codes explain other reasons a penalty may not apply.
- For self-funded plans, who was covered
The Main Parts of Form 1095-C
Part I – Employee and Employer Information
Identifies the employee (name, Social Security number and address) and the employer (name, EIN, address and phone number), so the IRS can match the form to the right people.
Part II – Offer of Coverage
This is the core of the form. It uses IRS codes and amounts to describe the employer’s offer each month.
- Line 14 – Offer of coverage: A code from the “1 series” describes what was offered, including whether the coverage provided minimum essential coverage and minimum value, and whether it was offered to the employee, spouse and dependents. Some codes are specific to ICHRAs.
- Line 15 – Employee required contribution: The employee’s share of the monthly premium for the lowest-cost, self-only plan offered that provides minimum value. This is not what the employee actually paid for the plan they chose, and it doesn’t include the cost of spouse or dependent coverage. The IRS uses it to measure affordability.
- Line 16 – Safe harbors and other relief: A code from the “2 series” explains why a penalty may not apply for that month. For example, the employee wasn’t employed, was in a waiting period, enrolled in coverage, or the offer was declined but met an affordability safe harbor.
- Keep in mind: The employer mandate looks at whether coverage was offered, not whether employees enroll. An employee can decline an offer without creating a penalty for the employer. When an employee declines, the Line 16 affordability safe harbor code is how the form shows that the offer was affordable. For employees who enrolled, or who weren’t offered coverage for a reason such as not being employed or being in a waiting period, other Line 16 codes explain that instead.
- Line 17 – ZIP code: Used only for certain ICHRA offers.
Part III – Covered Individuals (Self-Funded and Level-Funded Plans Only)
If the ALE sponsors a self-funded or level-funded plan, Part III lists everyone covered under the plan (the employee and any covered family members) and the months they were covered. Fully insured ALEs leave Part III blank, because the insurance carrier reports coverage on Form 1095-B. This section relates to the ACA’s individual mandate. It reports the coverage people actually had, rather than the ALE’s offer of coverage.
Several states with their own individual mandates, including California, also require this coverage information to be reported to the respective state agency. See Individual Mandate and Reporting.
How the IRS Uses It
The IRS compares Form 1095-C with Form 1094-C and with employees’ tax returns. If an employee received a Premium Tax Credit (PTC) for individual and family coverage through the Marketplace, and the employer’s Form 1095-C doesn’t show an offer of affordable, minimum value coverage – or the codes don’t line up – the IRS may send the employer a Letter 226-J proposing a penalty. See Employer Mandate Penalty Enforcement Process.
The IRS updates the form, codes and instructions each year. See the IRS’s About Form 1095-C page for the current version.
The Broker’s Role
Understanding Form 1095-C can help brokers recognize what employers report and why. But completing and filing it is a tax matter. It involves choosing codes, calculating affordability and applying safe harbors. Form 1095-C should be prepared and filed by the employer with its tax counsel, CPA, payroll or reporting provider, or other qualified tax professional, not by the broker.
Important: This information is provided for general educational purposes and reflects the rules as of November 2026. It is not legal or tax advice. How these rules apply depends on each employer’s specific circumstances, so employers should review their situation with their own legal counsel, ERISA attorney, CPA or tax advisor.