Have you ever looked at your files particularly the tax
documents and you stumbled across the 1095-C form and asked yourself or maybe
you did not ask yourself but you should have asked “What purpose does this
serve?” You’re not alone! Most Americans get introduced to it in this form with
very little information given to them and they get it terribly wrong. In this
article, you’ll learn what 1095-C is, why it matters, and how it plays into
your financial and health needs. Let’s dive in.
Understanding the Basics of the 1095-C Form
The 1095-C is a form that has been prescribed by the ACA
with regards to tax issues. It can be from certain employers to their employees;
the health insurance option given to whom, and whether the offer was accepted.
In other words, form W-2 is evidence that the individual received
healthcare Premium through their employer that meets or surpasses the ACA
standards. It is also used by the IRS in the companies compliance with the ACA
requirement for employer mandated insurance for employees.
Who Receives a 1095-C Form?
Not all individuals are granted a 1095-C form. It is released for employees of Applicable Large Employers (ALEs)—organizations with 50 or more full-time employees (or their equivalents). You will probably receive this form if your employer is an ALE that offers health insurance.
One thing that should be mentioned here is that it doesn’t mean that you enrolled into this form of coverage. It only notifies of offers for coverage and whether you had accepted any of them.
What Information is on the 1095-C Form?
The 1095-C form contains three main sections:
1. Employee Information: This includes your name, address,
and Social Security number.
2. Employer Information: The name, address, and Employer
Identification Number (EIN) of your company.
3. Coverage Details: A breakdown of the health insurance
coverage offered to you each month of the year. This part shows whether the coverage
met the ACA’s minimum essential coverage and affordability standards.
Why is the 1095-C Form Important?
Here’s where the 1095-C form plays a crucial role:
1. For Tax Purposes
While you don’t need to attach the 1095-C form to your tax
return, it’s an essential document for verifying your healthcare coverage. The
IRS uses it to confirm that your employer is meeting its obligations under the
ACA. If you’re filing taxes, keeping the form on hand is a good idea, as it can
help resolve any discrepancies related to your healthcare coverage.
2. Avoiding Penalties
Under the ACA’s employer mandate, ALEs must offer health
insurance that meets specific standards. If they fail to do so, they may face
penalties. Similarly, individuals without health coverage may have faced
penalties in the past (though the individual mandate penalty was reduced to $0
federally starting in 2019).
3. Proof of Coverage
If you’re applying for other programs or benefits that
require proof of health insurance, the 1095-C form can serve as evidence. For
instance, some state-based insurance programs or employers might ask for this
document.
How to Use Your 1095-C Form
So, now that you’ve received your 1095-C form, what should
you do with it?
- Review It Carefully: Check that all the information is
accurate. Errors in your name, Social Security number, or coverage details can
lead to complications during tax filing or when providing proof of insurance.
- Retain It for Your Records: Even though you don’t file
this form with your taxes, keep it in your records for at least a few years. It
could be useful if there are questions about your healthcare coverage later on.
- Use It to Cross-Check Other Tax Forms: If you also receive
a 1095-A (for Marketplace coverage) or 1095-B (from insurance providers), make
sure the information matches across all forms. Discrepancies could delay your
tax refund or trigger an IRS inquiry.
Frequently Asked Questions About the 1095-C Form
Do I Need the 1095-C Form to File My Taxes?
No, you don’t need to attach the 1095-C form to your tax
return. However, it’s wise to review it before filing to ensure there are no
errors or omissions.
What Happens if I Don’t Receive a 1095-C Form?
If you believe you should have received a 1095-C but didn’t,
contact your employer’s HR department. They are responsible for issuing the
form. Keep in mind that the deadline for employers to provide these forms is
usually January 31st of the following tax year.
Can I Get a Digital Copy of the 1095-C Form?
Many employers offer digital copies of tax forms through
their employee portals. Check with your HR department or payroll provider to
see if this option is available to you.
What if My 1095-C Form Contains Errors?
Mistakes can happen. If you notice an error on your 1095-C,
report it to your employer immediately so they can issue a corrected version.
Accurate information is essential for both your taxes and the employer’s
reporting to the IRS.
Why the 1095-C Form Needs Not to Be Overlooked
Most people never look at the 1095-C form as anything more
than forms used in taxes but they are significant in the U.S healthcare . It is
an essential means of tracking how organizations are catering their employee’s
health requirements. Thus, used to monitor compliance with the ACA, it helps
promote the concept of affordable healthcare for Americans in large.
Furthermore, the 1095-C form can also helpful in comparing
how the benefits on healthcare have changed over a period. It is possible that
the forms completed in one year may have been less expensive or provided more
coverage than forms for the next year, and this might be important if your
employer’s health insurance provided you with a reason to change careers or
your plans for future healthcare.
Conclusion
Of course, the 1095-C form might look like a simple form to
fill in where one can easily lose it in a pile of other papers, but actually,
it has its place in the cooperation between health care facilities and taxes.
When ACA requirements are met or an employee makes sure their coverage they have
is recorded, this form provides accountability.
Unfortunately, tax season and healthcare reporting is full
of mandatory paperwork like the 1095-C form – so understanding simply what it
is for can only be helpful in your preparation. File it away, read through it
and do not hesitate to contact your employer if there is something you do not
understand. Remember, being informed is being armored in today’s context
especially when dealing with ones own individual self and its finances.
