Navigating the Affordable Care Act (ACA) reporting requirements can be confusing for business owners. Choosing the correct form is essential to avoid IRS penalties. This guide clarifies the differences between Form 1095-B and 1095-C based on your company size, insurance type, and exactly what parts of the forms need to be issued and to whom.
Purpose: Form 1095-C is the "Employer-Provided Health Insurance Offer and Coverage" form. Its primary purpose is to help the IRS determine if an Applicable Large Employer (ALE) - those with 50 or more full-time employees or full-time equivalents - complied with the employer mandate to offer affordable, quality health insurance.
It details the specific "Offer of Coverage" codes (Line 14) and "Safe Harbor" codes (Line 16) that prove the employer met their legal obligations.
Purpose: Form 1095-B is the "Health Coverage" form. Its primary purpose is to prove that an individual actually had Minimum Essential Coverage (MEC). It focuses on who was covered and for which months of the year, ensuring individuals aren't claiming tax credits they are ineligible for.
Whenever you (or an insurance carrier) send 1095 forms to the IRS, they must be accompanied by
a transmittal "cover sheet" summarizing the submission.
Small businesses are generally not subject to the ALE mandate. However, their filing requirement depends on how their insurance is funded.
| Insurance Plan Type | Employer Responsibility | Insurance Carrier Responsibility |
|---|---|---|
| Fully-Insured (Third Party) | No Filing Required | Files Form 1095-B Issued To:
|
| Self-Insured (Company pays claims) | Files Form 1095-B Issued To:
| No Filing Required |
| Insurance Plan Type | Employer Responsibility | Insurance Carrier Responsibility |
|---|---|---|
| Fully-Insured (Third Party) | Files Form 1095-C Issued To:
| Files Form 1095-B Issued To:
|
| Self-Insured (Company pays claims) | Files Form 1095-C Issued To:
| No Filing Required |
