Rivermate | Product owner - Andrew Simon

Global Work Glossary

What is the purpose of the 1095 form?

IRS Form 1095-C, known as the Employer-Provided Health Insurance Offer and Coverage form, is a crucial tax document mandated by the Affordable Care Act (ACA). Applicable Large Employers (ALEs) in the United States must annually submit this form to the IRS for each full-time employee who worked for at least one month during the previous calendar year. Additionally, employers must send a copy of Form 1095-C to the employee.

This form collects vital information such as the employee's name, Social Security Number (SSN), and address. It contains details about the health insurance coverage offered by the employer. It also includes data on the least expensive premium offered to the employee and the months during which coverage was available.

Form 1094-C, or the Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, serves as a summary of all Form 1095-C submissions for the employer. It contains essential details about the employer, including contact information and the total number of forms being filed.

An ALE is defined as an employer with an average of at least 50 full-time employees or full-time equivalent employees (FTEs) during the prior calendar year. FTEs include any employee who works a minimum of 30 hours per week. Calculating FTEs involves tallying actual hours worked by part-time employees and dividing the total by 120.

Failure to file Form 1095-C can result in penalties under IRC Sections 6721/6722. Penalties vary depending on factors such as the timeliness of filing and intentional disregard of filing requirements. Employers need to adhere to ACA reporting requirements to avoid potential fines and ensure compliance with the law.

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