IRS Form 1095-C is a tax document that an “Applicable Large Employer” (ALE) must provide to its employees. An ALE is a company with 50 or more full-time employees (or full-time equivalents) during the previous year.
The purpose of the form is to report information to both the IRS and the employee about the health insurance coverage, if any, the employer offered. Even if an employee chose not to enroll in the company’s health plan, they will still receive a Form 1095-C as long as they were offered coverage. This form is a key component of the Affordable Care Act (ACA) reporting requirements.
For employees, this form is an important record to keep with their other tax documents, such as W-2s. It provides detailed information on:
- Coverage Offered: The form specifies whether the employer offered the employee and their family health insurance coverage.
- Affordability: It includes information about the lowest-cost monthly premium available to the employee for self-only coverage.
- Months of Coverage: It indicates which months of the year the coverage was offered and, in the case of self-insured plans, which months the employee and their family were enrolled.
Form 1094 vs. Form 1095: What’s the Difference?
While both forms are part of the same ACA reporting process, they serve very different purposes and are sent to different parties.
- Form 1095-C: This is the individual form. It is given to each full-time employee by their employer and a copy is also sent to the IRS. It provides specific details about the health coverage offered to that single employee.
- Form 1094-C: This is the transmittal form. It’s a summary or “cover sheet” that the employer sends to the IRS along with all of its employees’ Forms 1095-C. Form 1094-C provides an overview of the company’s overall compliance with ACA requirements, including the total number of Forms 1095-C being submitted and a summary of the health coverage offered by the company as a whole.
In simple terms, think of it this way: the Form 1095-C is the detailed report on each individual employee, and the Form 1094-C is the summary report for the entire company. An employee will only receive a Form 1095-C; the employer is the only party that handles and submits the Form 1094-C.