Employers subject to the Affordable Care Act must file several IRS forms annually, including Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns.” Here’s what you need to know about the form and how to stay in compliance with the relevant regulations.
What is Form 1094-C?
This form is the cover sheet that certain employers must send to the IRS when they submit their Forms 1095-C each year. The form is sent only to the IRS, not to employees.
Form 1094-C provides the agency with the information it needs to check an employer’s compliance with its obligations under the ACA. The IRS can impose penalties on employers that fail to offer the required health insurance coverage.
The form is also important for premium tax credits for employees who obtain insurance through a government-run health insurance exchange rather than the employer. The IRS needs information on the employer’s offer of coverage, including its cost, to determine whether employees are eligible for the credits.
What is an “Authoritative Transmittal”?
Employers can file multiple Forms 1094-C to transmit their Forms 1095-C to the IRS—each accompanied by Forms 1095-C for a portion of their employees. If you file more than one, though, you must identify one of them (on line 19, Part I) as the Authoritative Transmittal. That form will report certain aggregate data for all full-time employees and all employees, as applicable.
Which employers must file Form 1094-C?
Employers that are required to file Forms 1095-C must send a Form 1094-C when submitting them to the IRS. Form 1095-C is required of applicable large employers (ALEs), meaning those with 50 or more full-time workers, including full-time equivalent workers.
Under the ACA, any employee who works an average of at least 30 hours per week, or 130 hours of service per month, is a full-time worker. A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, combined, are equivalent to a full-time employee. To determine the number of full-time equivalent employees:
- Combine the number of hours of service of all non-full-time employees for the month but do not include more than 120 hours of service per employee, and
- Divide the total by 120.
Do small employers ever need to file the form?
Yes. For example, you may need to file and provide the form if:
- Your business is a member of an “aggregated ALE” under common control, and
- The aggregated ALE employed on average 50 or more full-time employees (including full-time equivalent employees) on business days during the preceding calendar year.
Each member in an aggregated ALE reports separately, though. And, while you can be held liable for noncompliance with your own reporting requirements, you can’t be liable for the noncompliance of any other member of the aggregated ALE.
Small employers also must file if they offer an employer-sponsored, self-insured group health plan. But, rather than filing Forms 1094-C and 1095-C, they should file Forms 1094-B, “Transmittal of Health Insurance Coverage Returns,” and 1095-B, “Health Coverage” to report information for employees who are enrolled in the health coverage.
What information is required to complete the form?
Among other things, the form asks you to provide:
- Your address, phone number, and Employer Identification Number
- Number of employees
- Name of and phone number for a contact person,
- Number of 1095-C forms being sent
- Coverage information on a month-by-month basis
When should I send my form?
When filing paper forms, Forms 1094-C and 1095-C are due to the IRS by February 28 (or the next business day when it falls on a weekend or holiday) of the year immediately following the calendar year to which the return relates.
You have until March 31 if you file electronically. Employers with 250 or more forms must submit electronically through the ACA Information Returns (AIR) program.
What if I don’t comply?
You could end up on the hook for some stiff penalties. While the penalty for failing to file Form 1094-C is only $280, the penalties for failing to file Form 1095-C is $280 for each return — up to $3,426,000 in total penalties.
Special rules increase the allowable per-statement and total penalties when the IRS finds an employer intentionally disregarded the requirement to furnish an employee statement or file a return.
Penalties can be waived in some circumstances, including when an employer can show reasonable cause.
What if I make a mistake on the form?
You only need to correct it if the error was on the Authoritative Transmittal (see above). As soon as possible, file a standalone, fully complete form with the correct information. Make sure you check the “CORRECTED” box, and don’t submit any other documents (for example, Form 1095-C) — just the Authoritative Transmittal.