Understanding Form 1095-C: Employer-Provided Health Insurance
Okay, so you received this form called Form 1095-C. It might look a little intimidating with all those boxes, but don’t worry! It’s really just a record of health insurance your employer offered you. It’s sent by companies that are considered “large employers” under the law. Let’s break it down and see why this form is important.
Why Does Form 1095-C Exist?
Form 1095-C came about because of the Affordable Care Act (ACA), sometimes called Obamacare. The ACA requires most people to have health insurance. It also mandates that large employers offer health coverage to their full-time employees. The 1095-C helps the IRS track whether large employers are offering adequate and affordable coverage, and it also helps the IRS determine if an individual is eligible for a premium tax credit. Before this form, the IRS had no easy way of knowing what employers were providing to their employees, and what health insurance an individual may or may not have.
How the Form Works
The form itself provides key information. It includes details about the employer, the employee, and the health insurance coverage offered during the tax year. Here’s a quick rundown of what you’ll typically find:
- Employer Information: Name, address, and Employer Identification Number (EIN) of your company.
- Employee Information: Your name, address, and Social Security Number (SSN).
- Coverage Offered: This is probably the most important part. It shows the type of health insurance offered, the cost of the coverage for the employee, and if you enrolled.
- Months of Coverage: It indicates for which months during the year you were offered coverage.
- Safe Harbor Code: This code provides information about how the employer determined the affordability of the plan they offered.
Who Gets Form 1095-C?
You’ll typically receive Form 1095-C if you work for a company that has 50 or more full-time employees (or equivalents). This means that if you’re a full-time employee at a large company, you should receive this form by mail or online from your employer by the deadline. It’s important to keep this form with your other tax documents for when you file your tax return.
Example Scenario
Let’s say you work at “Acme Corp,” a company with 200 employees. Acme Corp provides health insurance to its employees. At the end of January, you receive a 1095-C form. It shows Acme Corp offered you health insurance for all of 2023. It also shows you enrolled in their plan, and the cost of your premiums per month.
Another scenario is that you worked at Acme Corp for only half of 2023. Your 1095-C would show coverage was only offered to you for the time period that you were an employee.
How To Use Form 1095-C
The main purpose of Form 1095-C for you, the employee, is for your tax return. You’ll need it when you file your taxes, because, along with other factors, it helps determine if you qualify for a premium tax credit.
The Premium Tax Credit: If your employer’s health insurance plan was deemed unaffordable or didn’t meet the minimum value requirements, and you purchased your health insurance through the marketplace, you might be eligible for a premium tax credit. This credit can help lower the cost of your health insurance. You’ll need your 1095-C to figure out if you’re eligible when you file your taxes.
When You Don’t Need Form 1095-C: If you were covered by your employer’s health insurance for the entire year and you don’t qualify for the premium tax credit, you won’t actually need to submit the Form 1095-C with your tax return. You just need to keep it with your tax records.
Form 1095-C vs. Form 1095-B
You may hear about another form, Form 1095-B. It’s important to know the difference between these two.
- Form 1095-C: As we’ve discussed, it’s provided by large employers and focuses on employer-provided health insurance.
- Form 1095-B: This form is provided by health insurance providers or other entities that provide coverage and confirms that you, and possibly others, had health insurance coverage during the year.
Essentially, the 1095-C focuses on offer and coverage offered by large employers, while the 1095-B focuses on the actual coverage that you had through an insurance provider. You might receive both if you’re covered by an employer and also have separate health insurance, or if you are receiving an insurance subsidy through the marketplace.
Related Terms
To understand Form 1095-C better, it’s helpful to know these related terms:
- Affordable Care Act (ACA): The health reform law that mandates employer coverage and individual insurance.
- Premium Tax Credit: A credit that helps eligible individuals and families afford health insurance purchased through the marketplace.
- Minimum Essential Coverage (MEC): The type of coverage that satisfies the individual mandate of the ACA.
- Applicable Large Employer (ALE): An employer that has 50 or more full-time employees (or equivalents).
- Marketplace: The online exchange where individuals can purchase health insurance.
Tips & Strategies
Here are some tips when dealing with your 1095-C:
- Keep it Safe: Treat it like other tax documents. Store it securely.
- Check for Accuracy: Make sure all your information, like name, SSN, and coverage dates are correct.
- Contact Your Employer: If there are any errors on your 1095-C, contact your company’s human resources or benefits department for a corrected version.
- Don’t Panic: You don’t need to send the form to the IRS unless you are claiming the premium tax credit.
- File on Time: Make sure you have all your tax forms ready to file by the tax deadline.
- Seek Assistance: If you are unsure how to use the form when filing your taxes, seek out the assistance of a qualified tax professional.
Common Mistakes & Misconceptions
Let’s clear up some common misunderstandings about Form 1095-C:
- Not a Tax Form to Send: Many people believe they need to submit the 1095-C with their tax return, but this is not the case, unless claiming the premium tax credit.
- Not a Proof of Insurance: It’s not a replacement for your insurance card. It just shows what your employer offered.
- Not for Small Businesses: If your company has less than 50 full-time employees, you typically will not receive this form.
- It Doesn’t Always Mean You Need to File: If you don’t qualify for the premium tax credit and have full year coverage, you may not need the form.
The Bottom Line
Form 1095-C might seem confusing, but it’s essentially a record of what health insurance your large employer offered you during the year. You’ll use it when you file your taxes to determine if you’re eligible for the premium tax credit. Don’t be afraid of it! Understanding this form makes taxes a little less complicated.