Posted in Offering health benefits | by: Lauren Fifield

A 10-Step Guide to Mastering Your 1094-C and 1095-C Forms

You’re parked in front of your computer and all you see is a jumble of shaded boxes staring back at you. If you’re a business owner trying to make sense of the Affordable Care Act’s 1094-C and 1095-C forms, this scene probably feels too real. Basically, the two health insurance documents go together like peanut butter and jelly. And sandwiched inside, there’s a whole lot of important information you should know about. In this article, we’ve highlighted the ten main concepts, so when the time comes to fill them out, it will be one deliciously easy experience.

1. If you have 50 or more folks on your team, these two forms are for you

How many people worked at your company last year? If the number hovers somewhere between 50 and 99, then it means you’re officially a member of the Applicable Large Employer (ALE) club. This is just a fancy term for any company that has 50 or more full-time or full-time equivalent (FTE) workers on staff.

Don’t get tripped up by the FTE acronym we just threw in there. FTE is a measurement that converts the hours worked by a part-time employee to those worked by someone who is full-time. Get a quick check of how many FTEs you have with this calculator.

2. Forms that rhyme together, stay together

Okay, so now you know there are two documents you have to send in. But which one is which? Think of it like submitting a book report. The 1094-C is your title page, and the 1095-C is the actual report itself. And in this case, the report contains vital details about each employee’s health insurance for the year. Together, these forms are used to determine whether you pass the employer shared responsibility clause.

You’ll send 1094-C and 1095-C to the IRS, and you’ll also give a personalized copy of the 1095-C to every single person on your team.

3. Which brings us to the next point — there’s a good reason for you to fill them out

The entire reason these forms exist is to show the IRS that you’re providing your team with meaningful health care. Under the Affordable Care Act’s employer mandate, or employer shared responsibility provision, companies are required to follow a set of guidelines that help them support the well-being of their teams. In a nutshell, the provision says that any business with 50 or more people needs to provide health insurance that is comprehensive, affordable, and covers 60 percent of an employee’s health care costs. Or in other words, it has to offer “minimum essential value.” If you don’t stick to this golden rule, you’ll have to pay a fine to the IRS.

4. Knowing what to fill out is half the battle

These documents aren’t as scary as they look. There are only a few parts you need to tackle, and plus, you already know most of the information anyway. Before jumping in, warm up with this simple breakdown of what you’ll have to enter:

1094-C
  • Part I: Applicable Large Employer Member (ALE Member) This is where you input the basic details about your business: company name, address, and your federal employer identification number (FEIN).
  • Part II: ALE Member Information: This section summarizes the number of 1095-Cs you’re filing for your team.
  • Part III: ALE Member Information — Monthly: This section says whether or not you provided minimum essential coverage each month.
  • Part IV: Other ALE Member of Aggregated ALE Group: Are you a member of a group of aggregated companies? If not, skip this section.
1095-C
  • Part I: Employee and ALE Information This part houses the main information about you and your employee: name, address, Social Security number, and your federal employer identification number (FEIN).
  • Part II: Employee Offer and Coverage: Now this space lets you describe the actual coverage, how much it cost, and the reasons for offering it or not.
  • Part III: Covered Individuals: This section is for reporting details about those who are covered under a self-insured plan.

 

ACAchecklist

5. You have options

You can either file these two forms by printing them out and filling the old-fashioned way. Or, you can do it all online. It really comes down to what’s easier for you, and if you have enough time to finish it before the deadline. And that brings us to our next bullet…

6. Mind your deadlines

Here’s the deal: Give the 1095-C to your employees by January 31st. Then, send off the 1094-C and 1095-C to the IRS by February 28th, or March 31st if you plan to submit it online.

Can’t make it? No sweat. Get a 30-day extension by submitting Form 8809. If you still miss the deadline, you can petition to get your fine waived, but only if you have a legitimate reason.

7. Someone else can file these for you

If you use another service to help you manage benefits, they can mail the 1095-C to your team in addition to filing both forms with the IRS. However, be sure you know the total costs upfront.

8. But still, don’t forget to file

Fines are never fine. If you forget to send the forms in, you’ll be slammed with a $250 penalty per 1095-C form. And if you have a big team, that amount could mushroom into a really high number. That’s why it’s so important to go back to the whole reason you’re doing this. You’re proving to the government that you love your team so much that you gave them top-notch health insurance for the year. How cool is that?

9. If you made a mistake, don’t freak out. You can file a correction form.

You just finished filing, but you entered something incorrectly. Take a deep breath — the world is not over.

  • For the 1094-C, just check the “Corrected” box in the upper right-hand corner and send it in on its way.
  • For the 1095-C, you only need to check the “Corrected” box on the form with the error, but you need to send it in with the 1094-C — just don’t check “Corrected” on that document. Also, make sure you send your team the updated version as well.

10. Your team doesn’t have to do anything

We’re serious. When filing their taxes, tell your employees that they should store it in their records, but they don’t need to include it with their returns.

Now that you have these ten kernels of wisdom by your side, completing your 1094- and 1095-Cs will be a snap. And once you finish each one, you’ll start to see why health insurance is such a sweet part of the entire benefits universe.

About Lauren Fifield

Lauren is a health tech veteran and a licensed producer of accident, health, and life insurance. She currently leads benefits advising and operations at Gusto. You can get in touch with Lauren here.