The Ultimate Q&A Guide for ACA Tax Form 1095-C: Unraveling the Mystery


Let’s face it, taxes can be confusing and complex – and when it comes to specifics like the Affordable Care Act (ACA) Tax Form 1095-C, even more so. Yet, understanding this critical document doesn’t need to feel like deciphering an ancient script. Let’s simplify the jargon and make sense of it all with a Q&A session based on top concerns and updates.

1. What’s the deal with Form 1095-C?

Form 1095-C acts as a double-edged sword. On one side, it’s proof for businesses that they’ve complied with the ACA’s Employer Shared Responsibility Provision (ESRP). On the flip side, it provides employees with vital information about their health coverage over the year, which comes in handy during their personal tax filing.

2. Who needs to tackle Form 1095-C?

Applicable Large Employers (ALEs), companies with 50 or more full-time and full-time equivalent employees, are subject to ESRP and must complete a Form 1095-C filing. 

There are two main requirements for a Form 1095-C filing:

  • Distributing a copy of Form 1095-C to each employee
  • Filing Form 1094-C and Forms 1095-C with the IRS

3. Has anything changed with Form 1095-C recently?

Absolutely, the IRS isn’t about standing still. In recent years, they’ve added more codes to Form 1095-C, Line 14 to accommodate a wider variety of healthcare coverage scenarios, specifically for Individual Coverage Health Reimbursement Arrangement (ICHRA) plans. They also added another line, Line 17 – ZIP Code, that also corresponds to ICHRA plans. It’s a gentle reminder that staying updated with IRS changes is essential to ensure accuracy.

4. What information is needed to complete Form 1095-C?

You’ll need some basic details about your company and employees, along with specifics of the health coverage you’ve offered each month of the tax year. In some scenarios, you’ll also need to provide additional information about the offer of coverage. 

For example, if the employer offered a self-insured plan, then they will need to provide information about all covered individuals on the plan. This may include the employee, spouse, children, and/or other dependents. 

5. What if Form 1095-C isn’t filed correctly?

The IRS isn’t exactly forgiving with Form 1095-C errors. Mistakes can lead to penalties that can be substantial depending on the employer’s size and error extent. 

6. When is the due date for Form 1095-C?

The deadline for each tax year usually falls early in the next year. Employees should have their copies by March 2, and e-filing with the IRS should be done by March 31. 

7. Any tips to simplify Form 1095-C completion?

Sure thing! Consider investing in ACA compliance software that guides you through the filing process and keeps tabs on other ACA compliance aspects. This software can help track employee hours, monitor health coverage, alert you about potential compliance issues, and even generate and file forms on your behalf.

Form 1095-C may seem like a Gordian Knot, but with this Q&A guide, we hope we’ve helped untangle it a bit. Remember, each business is unique, and tailored professional advice is invaluable. Stay informed and updated with ACA regulations for a smooth tax season. And always, when in doubt, reach out to a tax professional.

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