Every year, employers and coverage providers file the Affordable Care Act (ACA) information returns with the IRS. The documentation presented to the IRS depends on the provider, the coverage amount, and other required information. These are generally due in late January or early March, depending on IRS guidance for the year.
As an employer, knowing which form applies to you between the 1095-A and the 1095-C ensures compliance and prevents issues with the IRS.
Keep reading to know the difference between 1095-A and 1095-C. We’ll break down the main similarities, key differences, and the purpose of each form.
TL;DR - Form 1095-A Vs. 1095-C
Here’s a quick snapshot of Form 1095-A vs. 1095-C, explaining what each form entails, its pros and cons, and best use cases:
| Form 1095-A | Form-1095C |
|---|---|
| Reports the healthcare coverage for individuals who bought their healthcare plan through the Health Insurance Marketplace, providing information needed to claim the premium tax credit. | Reports the employer’s health insurance coverage given to employees by showing the type of coverage offered and how long it was provided. |
| Pros | Pros |
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| Cons |
Cons |
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| Best For |
Best For |
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Are 1095-A and 1095-C the Same?
The short answer: they are not the same.
Even though Form 1095-A and 1095-C report healthcare coverage, they are entirely different.
For one, they are issued by different parties. Form 1095-A comes from the Health Insurance Marketplace, while Form 1095-C applies to large employers offering healthcare coverage to numerous full-time employees.
Most people get confused because both forms are IRS-mandated and are usually filed within the same period.
What is a Form 1095-A?
Form 1095-A illustrates the coverage individuals received through the Health Insurance Marketplace.
So, what is the Health Insurance Marketplace? Most states have an insurance marketplace, which is basically a regulated online platform where people can buy insurance plans. A good example is HealthCare.gov.
Therefore, when an individual buys insurance plans from this marketplace, they receive the Form 1095-A. The documentation illustrates:
- The individual’s selected plan
- Coverage period
- The premium tax credit
In simple terms, Form 1095-A shows that you purchased your plan through the insurance marketplace, and the government helped you to pay for your monthly premiums through the premium tax credit.
Purpose of Form 1095-A
Form 1095-A serves the following purposes related to taxes and healthcare coverage:
Proof of Health Insurance Coverage
Buying your coverage from the Health Insurance Marketplace is not enough if you don’t have proper documentation. The Form 1095-A solves this. It showcases your marketplace provider, selected plan, and coverage period, proving that you have a valid health insurance policy.
Report the Premium Tax Credit
Individuals buying their health insurance policy through the marketplace receive a premium tax credit. This is a refundable amount that the government contributes to help you pay for your healthcare insurance.
It’s important to note that not everyone who buys health insurance through the marketplace qualifies for the premium tax credit. Key eligibility requirements include:
- Individuals must have purchased their insurance plans through the Health Insurance Marketplace.
- Based on household income and other factors; the Marketplace determines eligibility and credit amounts.
- Individuals must not be eligible for other affordable plans, such as Medicaid, Medicare, or employer-sponsored plans.
Therefore, the Form 1095-A reports the amount of premium tax credit qualified individuals have received, which is essential when filing taxes.
Helps When Reconciling Taxes
Form 1095-A provides information for reconciling taxes. The government estimates your advanced premium tax credits and remits them to your provider.
When filing your taxes, you must use the information in the Form 1095-A, in this case, the premium tax credit, to ensure you make the necessary tax adjustments.
Based on your income, if the government gave you excess credit, you must refund some money. If you received less credit, you will receive the difference as a refundable tax credit.
For Compliance
The Health Insurance Marketplace sends a copy of your Form 1095-A to the IRS. This allows them to cross-check the information in the 1095-A documents against your tax return.
It ensures transparency and compliance with Form 1095-A requirements that require individuals to provide accurate premium tax credit information.
Do You Need a 1095-A to File Taxes?
If you’ve enrolled for a healthcare plan through the Health Insurance Marketplace, you will need a 1095-A Form when filing your taxes.
Specifically, it helps you complete Form 8962. This form compares the amount of credit you received throughout the year with the amount you qualify for, allowing you to know if you received excess or less credit.
Therefore, since the premium tax credit is recorded in the 1095-A Form, you will use it when filing the Form 8962, which you must submit when handling your taxes.
Employers are not required to file Form 1095-A, as it applies only to those who purchased their healthcare plans through the marketplace.
Even though the IRS receives a copy of your Form 1095-A from the marketplace, if you file your taxes without reconciling, they may delay your refund while they verify your tax information.
How to Obtain a 1095-A Form
Obtaining the 1095-A Form is easy. Follow this step-by-step process:
- Log in to the marketplace website to access your account.
- Find your application by selecting the correct application year.
- Navigate to the 1095-A Form to download it as a PDF.
- Check for a corrected form and download it instead.
You can also contact the marketplace to request the form, but accessing it online through your account is faster.
What Are 1095-C Forms?
Form 1095-C, also known as employer-provided insurance coverage, reports the employer’s health insurance coverage offered to employees.
This form is applicable in the following circumstances:
- The employer must have a large company with more than 50 employees.
- The covered employees must be full-time workers.
As for the document, it outlines the following items:
- Employer’s name
- Employee’s name
- Type of coverage offered
- Employee dependents are included in the healthcare plan
- Coverage period
- The lowest premium that the employee could contribute to the healthcare plan
It’s important to note that employees are not required to provide the 1095-C form when filing their taxes.
Purpose of Form 1095-C
The Form 1095-C is essential for various reasons, including:
Documenting the Employees’ Health Insurance
Form 1095-C provides proper documentation for employer-provided insurance. It highlights when the coverage was offered, for how long, and who is covered, including employees’ families. Employees can also use this form for record-keeping.
Employer Compliance
The ACA requires large employers, primarily those with more than 50 full-time employees, to provide health coverage for their workers. As such, the Form 1095-C illustrates compliance with this regulation.
The IRS uses it to determine whether an employer is subject to fines and other penalties, particularly if it fails to meet the minimum requirements for an employee-sponsored plan.
Informing Employees About Their Coverage
Employees are not required to provide this form when filing taxes, so the 1095-C serves as an information statement to them. Workers can use this documentation to:
- Determine whether the employer offered the minimum coverage required based on the ACA regulations.
- Verify the enrolled months.
- Confirm the dependents listed in the coverage.
Where to Find Form 1095-C
Employers can get this form from a third-party payroll provider that offers tax consultation and filing services. Those without these providers can get it from the IRS website. Here you will find instructions for generating and filing this form.
As an employer, you must send the form to your employees, either by mail or electronically
How to File 1095-C
Even though seeking a third party with experience in filing this form is a good solution, you can file 1095-C easily by following these steps:
1. Collect the Required Information: Gather sufficient information on your employees, including their names, addresses, and dependents to be covered.
2. Select an Appropriate Filing Method: Choose between manual and E-filing. While both methods are accurate, E-fling is better, especially when handling many employees.
3. Complete the Form 1095-C: Provide the following information when filling in this documentation:
- Part I: Include your name, address, and employer identification number. Additionally, provide your employee’s details, including their Social Security numbers and the number of dependents.
- Part II: Provide information on the type of coverage offered to the employees, the cost, and whether the employees will receive coverage monthly.
- Part III: Only for self-insured medical plan benefits. Enter your employee’s information, including the covered dependents and the months covered.
4. Review and Send the Form: Recheck the file to identify errors before submitting it to the IRS.
5. Send a Copy to the Employees: Email your employees the Form 1095-C for record-keeping and to showcase your compliance with the ACA regulations.
Common Mistakes Employers Make when Filing 1095-C
Even though filing Form 1095-C is easy, employers often make simple mistakes that leave them vulnerable to IRS penalties. Some of the most common errors include:
- Inaccurate Information: Providing the wrong employee names or Social Security numbers that don’t match the IRS records is a standard error.
- Failing to Include All Employees: It’s common for employers to leave out some employees or their dependents, which can lead to noncompliance issues, triggering fines.
- Filling in Part III: Part III is for employers with self-insured plans only. Some employers complete this section even though they offer fully-insured plans, a common mistake that can lead to penalties.
- Missing Deadlines: Failing to send your employees a copy of Form 1095-C is another common error.
Do you report 1095-C on Taxes?
If you’re a large employer with more than 50 full-time employees, you must report Form 1095-C to the IRS by the applicable deadline for paper or electronic filing, as specified by the IRS each year. Check the IRS instructions annually to confirm filing dates, since they may change.
Part of this procedure involves providing copies to employees before the deadline, as per the IRS guidelines for the year. However, employees shouldn’t file the report with the IRS, as the document is sent to them to provide proof of their coverage status.
Navigating Form 1095-A and 1095-C requirements can feel overwhelming, especially when filing errors trigger IRS penalties.
Remember, the difference between marketplace coverage and employer-sponsored is not just about the form you fill out. You need to provide the required documentation and provide error-free data to ensure your company remains compliant.
At Ethos Benefits, we are employee benefits consultants that leverage our fiduciary expertise to help the organizations we partner with handle benefits administration, compliance oversight, employee communications, and eligibility management, reducing the workload on HR teams. Additionally, we ensure our clients file all documentation and apply for renewals on time, avoiding last-minute rushes.
Schedule a no-obligation call today for expert consultation on your employee plans.
Relevant Characteristics Between Form 1095-A and Form 1095-C
The table below summarizes the main characteristics of Form 1095-A and 1095-C:
| Characteristic | Form 1095-A | Form 1095-C |
|---|---|---|
| Fee Structure | Individuals aren’t required to pay to receive this form since the Health Insurance Marketplace issues it. | Employers do not pay to access this form; they can download it from the IRS website. |
| Compliance Risk | Filing mistakes lead to incorrect tax credits. | Filing mistakes trigger IRS penalties for the employers. |
| Tax Impact | Required when filing the Form 8962. | Employees use it for information purposes on their healthcare coverage. |
| Issued by |
Health Insurance Marketplace |
Applicable Large Employers |
Forms 1095-A and 1095-C serve different purposes, which we’ll explore further in the next section.
Differences and Similarities
Forms 1095-A and 1095-C seem similar, but they apply to different parties and serve distinct purposes.
Let’s look at both:
Form 1095-A and 1095-C Differences
Form 1095-A and 1095-C differ based on the issuer, receiver, and intended purpose as outlined below:
- Purpose: Form 1095-A reports an individual’s marketplace healthcare coverage and possible premium tax credits for those who purchased their plans through the Health Insurance Marketplace. In contrast, Form 1095-C reports the employer-sponsored coverage and whether it meets the minimum requirements.
- Provided By: Form 1095-A is issued by the Health Insurance Marketplace provider, while Form 1095-C is granted by the employer, who must have more than 50 employees.
- Leading Receiver: Form 1095-A is received by parties that acquired their plans through the federally approved online marketplace, while Form 1095-C is received by full-time employees working for Applicable Large Employers (ALE).
- Tax Filing Use: Individuals may require Form 1095-A when filing Form 8962, while Form 1095-C provides proof that the employer offered the required healthcare coverage.
Form 1095-A and 1095-C Similarities
Next, let’s outline the main similarities of Form 1095-A and 1095-C:
- ACA Compliance: Both forms are essential for the IRS’s ACA compliance system.
- Coverage Information: Both forms provide the IRS with information on those receiving coverage and the type of coverage.
- Personal Information: Both forms contain personal information, such as names, addresses, and Social Security numbers.
Do You Need Both 1095-A and 1095-C?
As an employer, you will only need Form 1095-C, especially if you are an Applicable Large Employer (ALE) with 50+ full-time employees and offer health insurance coverage. Form 1095-A is for individuals who obtain their health insurance through the Health Insurance Marketplace.
The Bottom Line
Forms 1095-A and 1095-C are similar because they both provide coverage information, such as the type of plan and the duration for individuals enrolled in the reported coverage.
However, the purpose of both documents differs. Form 1095-A is for individuals who enroll in a healthcare plan through the insurance marketplace, while Form 1095-C is for employers offering healthcare plans to their employees.
As an employer, it’s important to exercise fiduciary responsibility for your health plans.
Ethos Benefits provides fiduciary-driven expertise that goes beyond just basic compliance. We offer bespoke, data-driven strategies to help our partners with their benefits programs. Our team also helps with benefits-related administrative roles, including eligibility screening and employee communications.
Our flat-fee model means you’ll get no surprise charges when you receive our consulting services.
Book your consultation today to strengthen your compliance framework for your employee plans.
Frequently Asked Questions (FAQs)
Below are some of the most frequently asked questions about Form 1095-A and 1095-C.
Can You File Taxes Without Receiving A 1095-A or 1095-C?
It depends on the form. You must receive the Form 1095-A when filing your taxes to reconcile the premium tax credit accurately. As for the Form 1095-C, you can file your taxes without it, since it primarily shows that the employer offered healthcare coverage.
Can You Receive Both 1095-A and 1095-C in the Same Year?
Yes. You can receive both forms in the same year if you were employed and enrolled in an employer-sponsored plan but later switched to self-employment. In this case, it would prompt you to acquire healthcare insurance through the Health Insurance Marketplace.
Is 1095-A required if You Have Employer Coverage?
No. You do not need Form 1095-A if you already have employer coverage, since it is for those who purchase plans through the insurance marketplace.
Do Self-Employed Individuals Receive Any 1095 Forms?
Yes. Self-employed individuals receive Form 1095-A if they obtained their health insurance through the Health Insurance Marketplace.
