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You Received Form 1095-C From Your Employer: Now What Do You Do?

June 7th, 2015 No comments

In January, employees of large companies with more than 50 employees will receive Form 1095-C from their employer as part of the requirements of the Affordable Care Act (ACA).  If you have an employer that offers health coverage, then you will receive a copy of this form, which your employer files with the IRS.  You will receive Form 1095-C even if you decline the employer-offered coverage.

The form will have the following information:

  • The type of coverage you were offered as an employee
  • The lowest cost premium available
  • Months of the year that the coverage was available

As an employee, you may have a question of whether you have to do anything with this form for your own income tax return.

The Purpose of Form 1095-C

Form 1095-C is the method for large employers to demonstrate that they have met the ACA requirement of offering affordable coverage to their employees.  Policies must be affordable and offer minimal value under ACA criteria, or the employer will face penalties.

In some cases, employers will not offer coverage and you will have to purchase insurance on your own.  If you buy coverage through the Healthcare Marketplace, then you will also receive 1095-A to verify the coverage.

If your employer does not meet this standard and employees must purchase coverage in the Healthcare Marketplace, then the employer would be levied an Employer Shared Responsibility Payment.  This payment is essentially used to offset the tax credit that employees will receive by purchasing their own coverage, and many large employers discontinued health coverage when they discovered the Shared Responsibility Payment was less costly than providing minimum value coverage.

Form 1095-C is also used by you as an employee:

  • To determine if your plan offers minimal essential coverage
  • To determine your eligibility for premium tax credits

If the employer provided coverage meets ACA criteria, then you simply check a box on your tax return that you have qualifying coverage.  If you opted to purchase health coverage in the ACA Marketplace, then you will file Form 8962 to claim the premium tax credit, which can help lessen the cost of health coverage.  Please see our related blog post on Form 8962 for an explanation of how to use this form.

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