Last week, the IRS opened its doors to begin receiving tax forms for the 2015 calendar year. Employers and employees alike are seeking direction for tax and reporting forms. Many employees know to expect a new form from their employers this year along with their W-2 but don't know much about it. If you're asking, "What do i do with my Form 1095-C?" you're not alone. We'll help you understand.
What is this Form 1095-C exactly? What about the recent IRS ACA reporting deadline extensions?
First, let’s discuss the purpose of Form 1095-C.
Form 1095-C is for reporting employer-provided health insurance offer and coverage. This form provides information employees will need to complete their individual tax returns. Employees will show whether they or their dependents had offers for minimum essential coverage. They will also show whether they received this coverage.
Similar to how your W-2 shows whether you owe taxes, Form 1095-C shows whether you and your employer need to pay fines for ACA noncompliance. This falls under the individual mandate and employer shared responsibility mandate.
Now let’s cover some important questions employees have about Form 1095-C.
Employers, see this article with instructions specific to your responsibilities with Form 1095-C.
Will I receive a Form 1095-C from my employer?
You will receive a 1095-C from your employer if your employer:
- Qualifies as an Applicable Large Employer. ALEs are employers with 50 or more full-time equivalent employees, OR
- Is a small business member of a controlled or affiliated service group with 50 or more full-time equivalent employees all together.
- If your hours of service equaled 130 or more hours in a month, or
- If you are a part-time employee enrolled in an employee-sponsored health plan.
Will I receive Forms 1095-A and 1095-B from my employer too?
You will receive Form 1095 from the entity that provided you health insurance coverage for 2015.
- Form 1095-A: you received coverage from a marketplace organization.
- Form 1095-B: you received coverage from a self-funded group or Small Business Health Options Program.
Your insurance carrier may also send you Form 1095-B if you enrolled in a fully-insured employer-sponsored health plan.
What do the different parts on Form 1095-C mean?
Part I: Employee and Applicable Large Employer member information. You may truncate employee ID numbers and social security numbers in individual statements. Statements submitted to the IRS by the employer must include the full numbers.
Part II: Employee Offer and Coverage. Part II reports on health coverage offered and the affordability of that coverage. For reporting on 2015, the Plan Start Month box is optional, however the IRS anticipates it will be a requirement in the future. For information on indicator codes in this section, see the IRS code definitions.
Part III: Covered Individuals. This section reports on the individuals and dependents covered under the self-insured plan. Social security numbers are required for all dependents. As a reminder, spouses are not included in the definition of dependents under the ACA.
For more detailed instructions on Form 1095-C, visit the IRS instructions page.
When should I expect to receive my Form 1095-C from my employer? Will it come with my W-2?
Employers must furnish Form 1095-C to employees by March 31, 2016. The IRS extended this due date for 2016 and the deadline will be January 31 (same as W-2) in the future.
Because of this extension, it is likely this year you will not receive Form 1095-C at the same time as your W-2.
My tax preparer asked for my Form 1095-C along with my W-2 this year. Do I need Form 1095-C to complete my individual tax return?
Most employees will not need to wait to receive their 1095-C to file their tax return in 2016. The IRS has a list of documentation to keep in your records to verify your coverage. Next year, you may need both forms to complete your individual tax return.
Employees will need their 1095-C information if the employee:
- Had gaps in health coverage for three or more months in 2015. In this case, the individual may be applying for an exemption from the individual mandate and will need Form 1095-C to do so.
- Had an unaffordable offer of coverage from an employer and received health coverage through a marketplace organization with a premium tax credit.
Do I need to submit Form 1095-C with my individual tax return?
No, do not attach the form to your tax return documents. You may keep the form for your records and refer to the form as needed when completing federal tax documents. Your employer will file the statement with the IRS.
Will I receive my Form 1095-C by email or in the mail?
Unless the employee gives consent, employers must furnish Form 1095-C to employees by paper. Employees may offer consent by paper or electronically, but, any consent given on paper must be confirmed electronically.
Speak with your employer or HR department for more information receiving your statement electronically.