Table of Contents
Frequently Asked Questions
Beginning in 2014, most Americans were required to obtain minimum essential coverage or pay a penalty (known as the "individual mandate"). These forms will assist the IRS in identifying which individuals were offered or had coverage through their respective employers.
Additionally, the information provided on these reports will be used to determine if an Applicable Large Employer member will be subject to the employer mandate penalty, and if an individual is eligible for a premium tax credit.
No. Employers with fewer than 50 full-time and full-time equivalent (FTE) employees (non-ALE members) that do not offer health coverage are not subject to the reporting requirements. Additionally, non-ALE members that offer fully insured health coverage are not subject to the reporting requirements; their insurance carrier is responsible for reporting. Employers with 50 or more full-time and FTE employees must complete and file Forms 1095-C and 1094-C, regardless of the type of coverage they provide.
It depends. If you offer fully insured coverage, the insurer is responsible for reporting. If you are a non-ALE member and you are self-insured (or level-funded), you will need to complete Forms 1095-B and 1094-B.
For the 2020 tax year, the deadline for providing the forms to employees is March 2, 2021, because the IRS extended the deadline. Additionally, employers must file the forms with the IRS by March 1, 2021 (or March 31, 2021, if filing electronically).
* Note: For the 2020 tax year, the IRS is providing penalty relief for failing to furnish Form 1095-B to employees. Entities must take certain steps to qualify for the penalty relief. See IRS Notice 2020-76 for details.
Among other things, you will report information such as:
- The name, address and Social Security Number of all full-time employees;
- The name, address and Social Security Number of all individuals (employees, spouses, dependents and others) who are covered under your group health plan;
- For each month, whether coverage was offered and to whom it was offered;
- The employee's share of the monthly premium for the lowest cost self-only coverage;
- The months during which the individual had at least one day of coverage.
You should start gathering the information by the end of the calendar year so that you have the necessary data to complete the forms early the next year. Employers that fail to meet applicable reporting requirements may be subject to penalties (for the 2019 tax year, the maximum penalty was generally $270 per form — $540 if the employer violates the requirements for both forms).*
* Note: For the 2019 tax year, the IRS is providing penalty relief for failing to furnish Form 1095-B to employees. Entities must take certain steps to qualify for the penalty relief. See IRS Notice 2019-63 for details.
Yes. Some states have recently enacted their own reporting requirements related to health coverage. For example, California, the District of Columbia (DC), New Jersey, and Rhode Island will require employer reporting of health coverage information to assist the state/district in enforcing individual health coverage mandates. In DC and New Jersey, the first reporting will occur in 2020. Reporting in California and Rhode Island starts in 2021. Check your state law to ensure compliance.
Employers are encouraged to seek assistance through legal counsel, tax professionals, or insurance brokers when filing these forms. For more information, see the FAQs provided by the IRS.
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Glossary of Terms
The Affordable Care Act is a comprehensive health care reform law enacted in March 2010 that impacts both employers and individuals.
Applicable Large Employers are generally employers that, together with other employers in their controlled group, employed 50 or more full-time and full-time equivalent (FTE) employees in the prior calendar year.
When two or more entities are treated as a single employer under section 414(b), (c), (m), or (o) of the Internal Revenue Code.
Full-Time Equivalent employees are calculated by adding all the hours worked by part-time employees (those working less than 30 hours per week) in a month and dividing by 120. Note: If the part-time employee works more than 120 hours but less than 130 hours during the month, only 120 hours must be included in the calculation.
Generally, a type of plan purchased by the employer from an insurance company where the insurance company assumes the health coverage risk.
Generally, a type of plan where the employer assumes the risk and pays participants' claims out of its general assets or a trust.
Generally, a type of self-insured plan where rates are based on group experience. They typically have fixed monthly payments that are used to pay claims and maintain stop-loss coverage. For instance, one year rates may be low due to a healthy population of the group but that could change the next year due to illness/injury in the group.
ALE members must file this form with the IRS and distribute it to certain employees to report information concerning the coverage offered.
This is the transmittal form that must accompany Form 1095-C when ALE members file it with the IRS.
Employers that are not ALE members and offer self-insured health coverage use this form to report certain information to covered individuals and the IRS about the months of coverage offered to employees. This form is also used by insurers to show coverage provided to individuals under a fully insured plan.
This is the transmittal form that must accompany Form 1095-B when non-ALE members who offer self-insured coverage file with the IRS.