If you know that you are going to have to file the 1095-C, you may have guessed from the “C” part of the form number that there are “A” and “B” forms as well. Why all the forms, and who is supposed to file what forms?
The reason for the forms of course is due to the two government mandates. One mandate covers individuals (cleverly called the “individual mandate”) and it requires everyone to obtain health insurance coverage for themselves and their dependents. The other mandate is directed to large employers (equally cleverly called the “employer mandate”).
Now if the government is going to mandate that someone does something, it must also create a form so that that someone can officially tell the government that in fact they did the thing that they were mandated to do and shouldn’t be penalized for failing to do the thing.
That’s where the the new forms come into play. Individuals basically have two choices to obtain coverage (if they don’t already have coverage through a government program like Medicaid or Medicare). They may buy an individual insurance plan (which could be purchased through a state or federal exchange (with or without a subsidy) or directly from an insurance company). Or they may obtain coverage through their employer.
The 1095-A form will be issued by the exchanges to individuals who purchase insurance coverage through the exchange. This will allow individuals to document that they obtained coverage for themselves (and their dependents) when they file their taxes and thus are not subject to the penalty tied to the individual mandate. Employers will not have anything to do with the 1095-A form.
The 1095-B form will be issued by insurance companies for the same purpose. You should receive a 1095-B if you have an individual policy purchased directly from an insurance company or that is provided through your employer and the employer is not running a self-funded plan. (That last bit is important.)
The 1095-C form is filed by ALE’s–Applicable Large Employers. That is, it is filed by employers to whom the “employer mandate” applies. If your company is under the threshold for “large employer” status, you are not subject to the “employer mandate”. You do not need to file the 1095-C.
The 1095-C is issued by the employer to document their compliance with the employer mandate (i.e. this is how the employer tells the government why they should not be penalized). It documents which employees enrolled in coverage when and for those who were not enrolled in coverage for any given month what the (hopefully valid) reason is for the employer not providing coverage. (If you’ve looked at the instructions for the form and seen all the codes for lines 14 and 16, that is what they are for.) As long as the employer has a valid reason for not providing coverage, the employer is not subject to a penalty.
The 1095-C form also includes a section (Part III) that duplicates the information on the 1095-B form that lists the individuals covered. This is only used for reporting employees that have coverage through a self-insured plan. That is because for a self insured plan, the employer is considered to be the insurer. As the insurer, the employer would be required to file both the 1095-C and the 1095-B forms. One form documents their compliance with the employer mandate, the other documents the employee’s compliance with the individual mandate. Rather than filling out two separate forms, the 1095-C was designed to handle both requirements.
You might have realized that there is one loophole when it comes to employer reporting. What if you have a company that is small enough to not be an ALE and is running a self-funded insurance plan? In that case your company will need to file the 1095-B forms because that is the form that insurance companies file and for a self-insured plan, the employer is considered the insurer. We don’t know if there are any customers that are doing this, so we do not have any plans right now to support printing these forms. If you are in this boat, let us know as soon as possible. Since the 1095-C includes all of the same information as the 1095-B, we may be able to use the same data entry option to input the information and add a separate printing option for this form to the HR program.
Questions? Leave a comment below!