Question 1

What are the filing deadlines for Form 1095-C?

Accepted Answer

Employers must provide Form 1095-C to employees by January 31 and file with the IRS by February 28 (paper) or March 31 (electronic).

Question 2

How can employers ensure they are compliant with ACA reporting requirements?

Accepted Answer

Employers can ensure compliance by understanding ACA guidelines, maintaining accurate records, and using reliable filing services like 1095EZ for accurate and timely submissions.

Question 3

How does 1095EZ handle data security for ACA forms?

Accepted Answer

1095EZ uses advanced encryption and secure protocols to protect sensitive data, ensuring that all information submitted for ACA reporting is safe and confidential.

Question 4

Can I do this reporting myself?

Accepted Answer

It is technically possible to complete this reporting yourself, but you'll need to register with the IRS Affordable Care Act Information Returns (AIR) system, and be able to generate/submit a file in the special XML format. The latter involves intense coding and development, and is not advised for any but the most technically savvy users. See IRS Publication 5165 for more information.

Question 5

What is the difference between the C-series forms and the B-series forms?

Accepted Answer

The 1095-C/1094-C are completed by an Applicable Large Employer (ALE) that averaged more than 50 full-time/equivalent employees in a calendar year. These forms report what coverage was offered, when, at what cost, and the employee's participation. The 1095-B/1094-B are filed by either an insurance carrier or an employer that is NOT an ALE that provided self-insured/level-funded coverage. These forms only report who was enrolled in health plan coverage, and when.

Question 6

What does 1095-C Row 14 mean?

Accepted Answer

Row 14 shows a series of codes that all begin with a '1'. These can be displayed either in each individual month, or in the [All 12 Months] column. The most common codes are: 1A - a Qualifying Offer of health insurance coverage, 1E - fully-compliant health coverage offered, 1F - partially-compliant (MEC Plan) health coverage offered, 1H - no offer of coverage.

Question 7

What does 1095-C Row 15 mean?

Accepted Answer

This box is used to display the employee's share of employee-only coverage available for that month, or all months. For example, if the premium was $250.00/month and the employer paid for half, the employee's $125.00/month payroll deduction would be displayed here. NOTE: this box always shows the employee-only cost, regardless of whether the employee enrolled in coverage for a spouse and/or dependents.

Question 8

What does 1095-C Row 16 mean?

Accepted Answer

Row 16 shows a series of codes that all begin with a '2' that can be displayed either in each individual month or in the [All 12 Months] column. These boxes drive whether the IRS assesses an ESRP (Employer Shared Responsibility Payment) penalty for failure to comply. The most common codes are: 2A - not employed, 2B - not a full-time employee, 2C - enrolled in at least Minimum Essential Coverage (MEC), 2D - first month of employment or initial waiting period, 2E - 'Multiemployer' scenario, 2F/2G/2H - Safe Harbor codes, for when compliant coverage is declined by the employee. NOTE: Leaving a box/row blank on Row 16 is effectively reporting that a penalty should be assessed for that period.

Question 9

What penalties exist for failing to file Form 1095-C?

Accepted Answer

Employers may face penalties for failing to file Form 1095-C, including fines for late or incorrect submissions. It is crucial to meet all deadlines and ensure accuracy to avoid these penalties.

Question 10

How much are the penalties for not filing Form 1095-C?

Accepted Answer

For 2024 filings due in 2025, the penalties are $330 per return not filed with the IRS, plus another $330 per return not distributed to employees, for a maximum of $660/form (with a $3,987,000 maximum per entity).

Question 11

If I file the returns but didn't offer fully-compliant coverage, or coverage at all, what are my penalties?

Accepted Answer

There are two possible types of penalties: 1) 4980H(a) Penalty - For failure to offer at least a MEC plan to more than 95% of the employees. The first 30 employees are not assessed a penalty, but then ALL remaining employees are assessed at a rate of $247.50/month ($2,970/year) for 2024. 2) 4980H(b) Penalty - This smaller penalty is only assessed when less-than-fully-compliant coverage is available, declined by an employee, and that employee gets a subsidy on the HealthCare.gov exchange. This penalty is assessed at a rate of $372.00/month ($4,460/year) for 2024, but only on the periods during which an employee received a subsidy.

Question 12

I got a Letter 226-J from the IRS. What is this about?

Accepted Answer

Based on your ACA reporting, the IRS believes that you did not offer compliant coverage during the relevant period, and has sent a proposed ESRP (Employer Shared Responsibility Payment) penalty. If you feel this is incorrect, you can use Form 14764 to dispute and explain why no penalty is due.

Question 13

I reported 100% compliance, so why does the IRS want to assess a penalty?

Accepted Answer

There is a hole in the enforcement mechanism that routinely puts a burden on employers. Some employees may decline compliant employer-provided coverage and instead enroll in a subsidized HealthCare.gov exchange plan, which while against the law, remains very easy to do. When this happens, the IRS assumes that the employee was right to receive the PTC (Premium Tax Credit) subsidy, and attempts to enforce the 4980H(b) penalty for months where a PTC was received. The burden of proof then shifts to the employer to demonstrate that coverage was available and affordable using one of the Safe Harbors.

Question 14

What Safe Harbors can I use to ensure I am not penalized?

Accepted Answer

There are three available methodologies that all revolve around an 8.39% Affordability rate (for 2024): 1) Federal Poverty Line Safe Harbor - The employee's cost cannot exceed 8.39% of the Federal Poverty Line, which calculates to a maximum of $101.94/month for 2024. 2) W-2 Safe Harbor - The cost of coverage for 2024 cannot exceed 8.39% compared to W-2 Box 1. 3) Rate-of-Pay Safe Harbor - This method takes the employee's rate of pay and multiplies by 130 hours to reach the target value.

Mandatory IRS Reporting