The 1095-C Form Explained Simply for Beginners

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Okay, here’s an article explaining the 1095-C form in a way that’s easy for beginners to understand:

The 1095-C Form Explained Simply for Beginners

The 1095-C form, officially titled “Employer-Provided Health Insurance Offer and Coverage,” can seem intimidating at first glance. But don’t worry! It’s actually much simpler than it looks. This guide will break down the form, explain its purpose, and help you understand what to do with it.

What is the 1095-C Form?

The 1095-C is a tax form that provides information about the health insurance coverage offered to you by your employer. It’s used to verify compliance with the Affordable Care Act (ACA), also known as Obamacare. The ACA requires “Applicable Large Employers” (ALEs) – those with 50 or more full-time equivalent employees – to offer affordable, minimum-value health insurance to their full-time employees (and their dependents). The 1095-C is how the employer reports the details of that offer to the IRS and to you.

Who Receives a 1095-C?

You will receive a 1095-C if you meet either of the following criteria:

  • You were a full-time employee (generally averaging 30 or more hours of service per week) for any month of the calendar year at an Applicable Large Employer (ALE). Even if you declined the insurance offer, you’ll still receive a 1095-C.
  • You were enrolled in your employer’s self-insured health plan, even if you were not a full-time employee. Self-insured plans are those where the employer directly pays the healthcare claims, rather than buying an insurance policy from a traditional insurance company.

Key Difference from Other 1095 Forms (1095-A and 1095-B):

It’s important to distinguish the 1095-C from other 1095 forms:

  • 1095-A (Health Insurance Marketplace Statement): This form is for individuals who purchased health insurance through the Health Insurance Marketplace (healthcare.gov or a state exchange).
  • 1095-B (Health Coverage): This form is sent by insurance companies and some smaller employers (those not considered ALEs) to show that you had health insurance coverage.
  • 1095-C. This is what we are talking about, sent by a large employer.

You might receive more than one type of 1095 form in a year, depending on your insurance situation.

Breaking Down the 1095-C Form: A Section-by-Section Explanation

The 1095-C is divided into three main parts:

Part I: Employee and Employer Information

This section is straightforward and contains basic identifying information:

  • Lines 1-6: Your personal information (name, Social Security number, address). Crucially, verify that your SSN is correct!
  • Lines 7-13: Your employer’s information (name, Employer Identification Number (EIN), address, contact number).

Part II: Employee Offer of Coverage

This is the core of the form and reports details about the health insurance offered to you by your employer. It doesn’t matter if you accepted or declined the offer; this section shows what was available.

  • Line 14: Offer of Coverage Code: This is a critical code that indicates the type of coverage offered to you for each month of the year. There are many codes, but here are some of the most common:

    • 1A: Qualifying Offer: Minimum Essential Coverage (MEC) providing minimum value was offered to you, your spouse, and dependents, and the employee’s share of the lowest-cost monthly premium for self-only coverage was at or below a certain percentage (adjusted annually) of the federal poverty line. This is generally the “best” code to see.
    • 1B: MEC providing minimum value offered to the employee only.
    • 1C: MEC providing minimum value offered to the employee and at least MEC offered to their dependents (but not spouse).
    • 1D: MEC providing minimum value offered to the employee and at least MEC offered to their spouse (but not dependents).
    • 1E: MEC providing minimum value offered to the employee, and at least MEC offered to their dependents and spouse.
    • 1H: No offer of coverage. This means the employer did not offer you coverage for that month.
    • 1G: Employee was enrolled in a self-insured plan for all 12 months. This will often appear even for part-time employees in self-insured plans.
    • Other Codes: These codes explain more specific situations, such as multiemployer plans, COBRA coverage, or periods when you weren’t a full-time employee. Consult the IRS instructions for a full list and explanation of each code.

  • Line 15: Employee Required Contribution: This shows the employee’s share of the lowest-cost monthly premium for self-only coverage that provides minimum value. This is important for determining the affordability of the coverage. Even if you enrolled in family coverage, this line will show the cost for just you. If Line 14 has code 1A, Line 15 might be blank.

  • Line 16: Section 4980H Safe Harbor Codes (and Other Relief): This line is used by the employer to explain why they might not be subject to penalties under the ACA, even if they didn’t offer coverage or the coverage wasn’t affordable. Some common codes:

    • 2A: Employee not employed during the month.
    • 2C: Employee enrolled in coverage offered.
    • 2F: Section 4980H affordability safe harbor based on W-2 wages.
    • 2G: Section 4980H affordability safe harbor based on the federal poverty line.
    • 2H: Section 4980H affordability safe harbor based on Rate of Pay.
    • Other Codes: These relate to specific circumstances, such as being in a limited non-assessment period.

Part III: Covered Individuals (Only for Self-Insured Plans)

This section is only completed if your employer offers a self-insured health plan, and you enrolled in that plan. It lists the names and Social Security numbers (or dates of birth if SSNs are unavailable) of all individuals covered under the plan (you, your spouse, and dependents).

  • Column (a): Name of the covered individual.
  • Column (b): Social Security Number (SSN) of the covered individual.
  • Column (c): Date of Birth (DOB), if the SSN is not available.
  • Column (d): Covered All 12 Months (checkbox).
  • Columns (e) – (p): Indicate the months of coverage for each individual. If the individual was covered for the entire year, the checkbox in column (d) will be checked, and columns (e) – (p) will be blank.

What Do I Do with the 1095-C?

  1. Review it carefully: Check for accuracy, especially your SSN and the coverage codes. If you find errors, contact your employer’s HR department to get a corrected form.
  2. Keep it with your tax records: You don’t need to attach the 1095-C to your tax return. However, you should keep it with your other tax documents, just like you would keep a W-2. The IRS already receives a copy from your employer.
  3. Use it to help complete your tax return (if applicable): While you don’t attach it, the information on the 1095-C might be relevant if you are claiming the Premium Tax Credit (PTC). The PTC is a refundable tax credit that helps eligible individuals and families afford health insurance purchased through the Health Insurance Marketplace. If you received a 1095-A and a 1095-C, you may need to reconcile the information to ensure you received the correct amount of PTC. If you’re unsure, consult a tax professional.
  4. Understand it’s not proof you paid premiums: A 1095 C shows what health insurance was offered, not what insurance you had, or what premiums you paid.

In Summary: The 1095-C in a Nutshell

The 1095-C is a form from your large employer that tells you and the IRS about the health insurance coverage they offered you. It helps the IRS verify compliance with the Affordable Care Act. You don’t need to submit it with your tax return, but you should keep it for your records. If you have any questions, contact your employer’s HR department or a qualified tax professional.

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