Understanding 1095-C Forms: 5 Key Components
As a responsible employer, understanding the 1095-C form is crucial for your organization. The Affordable Care Act (ACA) required employers with 50 or more full-time employees to provide minimum essential coverage to eligible employees and their dependents. This form provides an essential summary of the health coverage you offered to the employees, and working with this form will help you provide accurate information to the Internal Revenue Service (IRS). Here are five essential components of the 1095-C form that you need to understand.
1. Employee and Employer Identification Information
The first section of the 1095-C form includes employee identification information. This information identifies the employee to whom the form was issued, including the name, address, and Social Security number (SSN) of the employee, as well as the employer name, address, and employer identification number (EIN). Make sure that all personal and business information is correct, as it helps prevent mistakes on the form.
2. Healthcare Offer and Coverage
The second section deals with healthcare offer and coverage. This section is important to determine whether your organization met its obligations under the ACA. You should note whether your organization offered minimum essential coverage to specific employees. If an employee declined the coverage, make sure the reason for the refusal is accurately recorded. If an employee was enrolled, you must specify the start and end date(s) of the coverage offered.
3. Applicable Large Employer (ALE) Status and Safe Harbor Codes
The next part of the 1095-C form includes your organization’s ALE status and Safe Harbor codes. The information is essential, especially for self-insured health plans’ employers. The ALE status helps determine whether your organization is subject to specific ACA requirements. The Safe Harbor codes provide an employer with a “safe harbor” from certain ACA reporting responsibilities if specific requirements are met.
4. Employee Share of the Lowest-Cost Monthly Premium
The fourth section of the form provides information on the employee’s share of the lowest-cost monthly premium, which is a crucial number for your organization’s reporting requirements. This section displays the amount that the employee paid for his monthly insurance premium and is required for calculating the premium tax credit available to the employee.
5. Covered Individuals
The final part of the 1095-C form is the section on covered individuals. It specifies the persons covered by the healthcare coverage your organization offered or provided. This section includes the employee’s spouse and dependents who received health coverage through your organization. Each person’s name, SSN, and coverage period should be accurately recorded.
Conclusion
In a nutshell, understanding 1095-C forms’ five key components is vital for your organization’s operations. The information included in each section of the form helps the IRS determine whether your organization met its ACA obligations. Make sure you fill the form accurately and timely to avoid any penalties from the IRS. Remember, providing your employees with a good healthcare plan is one of the best ways to show your appreciation for their hard work and dedication.
