What is Form 1095-C and who must receive it?

Form 1095-C is an IRS tax form that Applicable Large Employers (ALEs) must provide annually to full-time employees. It details the health insurance coverage offered to employees under the Affordable Care Act. Employers with 50 or more full-time or full-time equivalent employees are required to furnish this form.

What data does HR need to collect to complete Form 1095-C accurately?

HR must gather employee details including hours worked, full-time or part-time status, offer of coverage codes, affordability information, and coverage months. This data often comes from payroll, benefits, and timekeeping systems and must be accurate to avoid penalties.

How does tracking part-time and variable-hour employees affect ACA compliance?

Tracking hours worked for part-time and variable-hour employees is crucial because it determines their eligibility for health coverage under ACA rules. Without proper tracking, employers risk noncompliance and potential IRS penalties if coverage isn’t offered when required.

What are the deadlines for distributing Form 1095-C and filing with the IRS?

Employers must provide Form 1095-C to employees by January 31 of each year for the prior year’s coverage. The transmittal form 1094-C and associated 1095-Cs must be filed with the IRS by March 31 electronically or February 28 by paper filing (if applicable).

How can ACA-Track assist HR with Form 1095-C compliance and reporting?

ACA-Track streamlines ACA compliance by automating employee hours tracking, generating accurate 1095-C forms, and handling electronic IRS filings. It integrates with payroll and HR systems, monitors eligibility, detects errors before submission, and provides support to help HR avoid penalties and manage audits.

Breaking Down Form 1095-C: A Guide for HR Professionals

Navigating the complexities of Affordable Care Act (ACA) compliance can feel overwhelming—especially when it comes to understanding and managing Form 1095-C. This critical IRS form plays a central role in proving that Applicable Large Employers (ALEs) have met their obligations to offer affordable health insurance to their full-time employees. For HR professionals, mastering the details of Form 1095-C and the related reporting requirements is essential to avoid penalties and keep your organization compliant.

In this comprehensive guide, we will break down everything you need to know about Form 1095-C, including key ACA concepts, data requirements, reporting timelines, and how a trusted compliance partner like ACA-Track can simplify the entire process.

What is Form 1095-C and Why is it Important?

Form 1095-C, titled Employer-Provided Health Insurance Offer and Coverage, is a tax form that ALEs must provide to their full-time employees annually. It documents the type of health coverage offered (or not offered), the months coverage was available, and other key information related to ACA compliance.

This form is vital because it:

Provides the IRS with information about whether employers met their shared responsibility obligations.
Enables employees to verify their health coverage status when filing taxes.
Helps the IRS determine if an employer owes penalties for failing to offer minimum essential coverage or affordable insurance.

ALEs must also file Form 1094-C, a transmittal form summarizing the employer’s ACA reporting data, which accompanies the 1095-Cs submitted to the IRS.

Who Must File Form 1095-C?

An ALE is generally defined as an employer with 50 or more full-time employees (including full-time equivalents) during the prior calendar year. The ACA requires these employers to offer health insurance to their full-time workforce and dependents or face potential penalties.

Full-time employee definition:
An employee working an average of 30 or more hours per week or 130 hours per month qualifies as full-time under ACA standards.

Employers also need to track part-time and variable-hour employees carefully since hours worked impact whether those employees become full-time equivalents (FTEs) for ACA purposes.

Key Data Elements Required for Form 1095-C

Filing accurate Form 1095-C requires collecting and consolidating data from various internal sources, including HRIS, payroll, benefits, and timekeeping systems. Important data points include:

Employee identification details (name, SSN, address)
Employment status (full-time, part-time, variable hour)
Months of coverage offered or not offered
Codes representing types of coverage offers or waivers (Line 14 and Line 16 codes)
Employee share of the lowest-cost monthly premium (Line 15)
Coverage details for self-insured plans (Part III)

Because this data resides across multiple departments, centralized tracking and reporting tools are critical.

Challenges HR Faces When Managing Form 1095-C Reporting

Data integration: Combining employee hours worked, payroll, and benefits data can be complicated, especially if systems don’t communicate well.
Variable-hour employees: Tracking actual hours worked for part-time or seasonal employees to determine eligibility requires precise time and attendance data.
Reporting deadlines: Providing employees with Form 1095-C by January 31 and filing with the IRS by March 31 can be daunting without streamlined processes.
Penalties risk: Failure to file accurate forms or offer compliant coverage can lead to significant IRS penalties, such as fines reaching over $500,000 annually.
IRS corrections: Employers may receive penalty notices like the IRS Letter 226-J, requiring quick and precise responses to avoid costly assessments.

How ACA-Track Simplifies ACA Compliance and Form 1095-C Reporting

Partnering with a dedicated ACA compliance solution can save HR teams countless hours and mitigate risk. ACA-Track is an industry-leading tool designed specifically to address ACA challenges with features like:

Comprehensive Data Collection

ACA-Track collects actual hours worked for all employee types — including full-time, part-time, variable-hour, and substitutes — from multiple sources, such as payroll, timekeeping systems, manual timesheets, and even mobile device entries. This helps employers track employee eligibility accurately.

Robust Monitoring and Alerts

The platform continuously monitors employee eligibility thresholds and sends advance alerts when an employee approaches full-time status, helping HR proactively manage coverage offers.

Accurate ACA Reporting

ACA-Track automates the creation of Forms 1094-C and 1095-C with full compliance to IRS specifications, including electronic XML filing. It also maintains all ACA compliance data securely in one centralized cloud location, simplifying retrieval for audits or IRS inquiries.

Flexible Configuration

Employers can customize measurement, administrative, and stability periods, as well as affordability calculations and waiver codes, to reflect their unique policies and keep reporting precise.

User-Friendly Interface

With customizable dashboards, snapshot summaries preserving payroll data over time, and advanced filtering options, ACA-Track empowers HR professionals with actionable insights at their fingertips.

Dedicated Client Support

Each ACA-Track client receives a dedicated Client Success Advisor to help navigate complexities and keep ACA compliance manageable and stress-free.

What Happens If You Don’t Comply?

Noncompliance can be costly. Penalties range from $50 to $270 per incorrect or late form, with caps reaching over $1 million for large ALEs. Worse, shared responsibility payments can total $2,000 per full-time employee (after the first 30). IRS penalty letters, like the 226-J notice, demand immediate responses and documentation.

ACA-Track helps companies avoid these pitfalls by ensuring accuracy and timely submission.

Final Thoughts: Why HR Should Leverage ACA-Track for Form 1095-C Reporting

ACA compliance is a cross-departmental effort involving HR, payroll, benefits, and finance teams. However, HR typically leads the charge in coordinating ACA tracking and reporting. The data volume and complexity involved mean manual processes and spreadsheets often lead to costly errors.

With ACA-Track, HR professionals gain a trusted, automated, and secure solution designed specifically for the ACA’s rigorous demands. From collecting precise hours worked, tracking eligibility, generating error-free 1095-C forms, to managing IRS filings — ACA-Track simplifies it all.

Don’t let ACA compliance overwhelm your HR team or put your organization at risk. Explore ACA-Track today and bring confidence and efficiency to your ACA reporting process.

Learn More About ACA-Track and Its ACA Compliance Services

Monthly line code audits for Form 1095-C
Variable hour tracking for employee eligibility
Federal and state ACA reporting, including electronic XML filing to IRS
Fixing ACA reporting errors with expert guidance
Flexible plans tailored to businesses of all sizes

Visit ACA-Track to get started with a proven ACA compliance solution backed by decades of expertise and client success support.

If you have questions about ACA compliance or need help simplifying your Form 1095-C process, let me know! I’m happy to help break it down further.