7 tax questions employees have about the 1095-C
It’s that time again – tax season. For employers, the first quarter of the year brings about more reporting, filing, calculations, and more often than not, questions from employees about their tax requirements and paperwork. Given all the excitement over the Affordable Care Act (ACA) last year, the confusion makes sense.
The ACA consistently made headlines in 2018. As part of the GOP tax bill, Congress essentially repealed the individual mandate for 2019 by zeroing out the penalty for not carrying health insurance. A Texas federal judge also ruled the ACA unconstitutional on account of the individual mandate, likely setting up a future showdown at the Supreme Court.
Despite continued attempts to dismantle the law, the employer mandate remained in effect for 2018 and stays in place for 2019 as well. This means during tax season employers must report on their offers of health care coverage, a process that begins with the distribution of the ever-confusing 1095-C to employees.
The good news is that the IRS has given employers until March 4 to distribute these forms to their employees. But that extension could mean more questions from employees looking to get their taxes done early.
Here are the most common questions to anticipate from employees about Form 1095-C and how you can answer them.
What is a 1095-C?
The 1095-C is the form that shows whether and when an employer provided or offered health care insurance at an affordable rate. It’s distributed each year by applicable large employers (ALEs) to all employees who qualify as full-time per the ACA, and it’s also shared with the IRS.
Form 1095-C allows the government to keep track of which companies are adhering to the employer mandate established by the ACA. The form includes basic information, like an employee’s address and social security number, and information on the health coverage offered by the employer.
Am I supposed to get a 1095-C?
The “repeal” of the individual mandate has no impact on Form 1095-C. All ACA full-time employees (those who average 30 hours of service a week) working for an ALE should receive a 1095-C, regardless of whether or not they were enrolled in employer-sponsored health care. Even if you were only ACA full-time for a single month, you should still receive a form.
Part-time employees will only receive the 1095-C form if they were offered and enrolled in an employer-sponsored self-funded health care plan. While coverage for part-time employees is not mandatory under the ACA, if you’re on a company’s self-funded health care plan, you should receive a 1095-C or 1095-B.
Two things to note: Employees who worked full-time for more than one ALE in the last year might get more than one 1095-C – one from each ALE. Your spouse and/or dependents covered by your employer sponsored plan will not get a 1095-C.
When will I receive my 1095-C?
You can expect to receive your 1095-C by March 4. If you don’t receive the form by this date but believe you should get one, you should contact your employer immediately.
Do I have to wait for my 1095-C to file my taxes?
No. Your 1095-C is not required for completing your tax returns, so you don’t have to wait for it to file.
So then what do I do with my 1095-C?
In most cases, no action is required. Check the form for simple mistakes, like an outdated home address, find out if you qualify for a subsidy (if on company health care, this probably isn’t the case), and file it away in a safe place with your other tax forms.
What should I do if I notice a mistake?
If there are errors on your 1095-C, call the contact number listed on the form and someone will be able to help you correct it.
I also got a 1095-B. Is that right?
Yes—you should get a 1095-B if you work for a fully insured or self-funded company.
Fully insured companies get their health plan through an insurance provider and pay the provider a premium. If your company is fully insured, the 1095-C will come from your employer, and the 1095-B from your insurance company. The forms should include the same information from slightly different perspectives.
Self-funded, or self-insured, companies operate their own health plan and are responsible for providing the 1095-B or 1095-C form (with part three completed) to their employees.
Recent changes to and debate over the ACA will likely add a new level of confusion to the filing and reporting process this year, and employees will probably have questions about the forms and requirements. With deadlines quickly approaching, prepare your responses now to ensure a smooth reporting season for you and your employees.