1095-A vs. 1095-B vs. 1095-C forms: Everything You Need to Know About the Key Differences

The reporting requirements of the Affordable Care Act (ACA) can form one of the most complicated annual decisions that will be to be taken by company executives, HR specialists, and the people in charge of employee welfare. The 1095 forms, to be more precise 1095-A vs 1095-B vs 1095-C, are required reports that help to report the status of providing health cover to the IRS and to individuals. The decision on the form to be issued or followed is not mutable. This purely depends on the party who paid the cover and the employer size (it matters). These differences and neglecting to file the right form can make your company subject to substantial risks because of the ACA penalties. This is a breakdown that elucidates the specific needs of each type.

What are 1095 Forms?

1095 forms refer to the information returns which are filled by the IRDS to report on Minimum Essential Covers (MEC) in the ACA. MEC is a health coverage that satisfies the standard of the federal government regarding basic benefits a plan should provide. These forms give assurance to the recipient and the IRS that the individual, as well as his or her family is covered during each calendar year month. One can be of three main forms:

• Form 1095-A: This form is applied to cover purchased in the Health Insurance Marketplace (Exchange).
• Form 1095-B: Form 1095-B is to be used with non-Marketplace cover offered by some insurance issuers or small, non-ALE self-insured employers.
• Form 1095-C: This form is intended solely to be used solely by Applicable Large Employers (ALEs) in reporting the offer of coverage to their full-time employees.

What is Form 1095-A?

Form 1095-A is named as a Health insurance marketplace statement. It plays an essential role to people who bought the coverage in the ACA Health Insurance Marketplace (or healthcare.gov).

Who receives a 1095-A?

This form is given to an individual who signed up in a qualified health plan in a state or federal Health Insurance Marketplace.

What information is included in a 1095-A?

The form has detailed information on a monthly basis such that the recipient may be in a position to file their personal income tax return:

• The names of the people that are covered.
• The months that coverage has been in place.
• The monthly premium amount.
• The size of Two Advance Payments of the Premium Tax Credit (APTC).
• The Second Lowest Cost Silver Plan (SLCSP) premium required in calculating the final Premium Tax Credit (PTC).

Do employees need a 1095-A to file taxes?

Yes. The recipient has to utilize the information on Form1095-A and complete Form 8962, Premium Tax Credit, prepared by IRS.This is known as reconciliation and the process reveals whether the appropriate amount of the Premium Tax Credit was computed in the year or not. The person filing without 1095-A may also result in huge delays in the processing of their tax filing.

Do you need to provide employees with Form 1095-A?

No. Employers are not involved in the issuance of Form 1095-A. This form is issued directly by the Marketplace.

What is Form 1095-B?

Form 1095-B is titled "Health Coverage." Its primary function is to report MEC that is not received from the Marketplace (Form 1095-A) and not reported by an ALE on Form 1095-C.

Who issues Form 1095-B?

Issuers of this form include entities which furnish MEC such as:

• The issuers are insurance companies.
• Government departments (e.g. Medicare, Medicaid, CHIP, Tricare).
• The employers who are sponsors of a self-insured health plan and are not Applicable Large Employer (ALE), that is a number less than 50 full-time equivalent employees.

Who receives a 1095-B?

Individuals who had MEC through a non-Marketplace source, such as:

• Directly covered through an insurance company.
• Coverage in a small employer (non-ALE) which offers a fully insured plan (insurer does the reporting).
• Exposure with a small employer self-insured plan (employer does the reporting).

What information is included in a 1095-B?

The form confirms:

• The responsible individual (policy holder).
• The names and Social Security Numbers (SSNs) of all covered individuals.
• The months during which they were covered by MEC.

When should you file and send a 1095-B?

The issuers of Form 1095-B should provide a copy to the concerned person March 2 of the next year after the calendar year covered. This form will have to be submitted with the IRS with the transmittal Form 1094-B by February 28 (or by the end of the month 31 in case of electronic filing).

What is Form 1095-C?

Form 1095-C is titled "Employer-Provided Health Insurance Offer and Coverage." This form is the most critical for most mid-to-large-sized organizations and HR departments, as it directly relates to compliance with the ACA's employer mandate.

What is Form 1094-C?

Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, is the cover sheet or transmittal form that must accompany the batch of 1095-C forms when filed with the IRS. It provides aggregate employer information, including the total number of full-time employees and the total number of 1095-C forms being filed. The 1094-C form is only sent to the IRS, not to employees.

Are you an Applicable Large Employer (ALE)?

Form 1095-C is only required to be filed and furnished by an Applicable Large Employer (ALE). An employer is defined as an ALE for a calendar year if they employed an average of at least 50 full-time employees (including full-time equivalent employees, or FTEs) on business days during the preceding calendar year.

• Full-Time Employee: An employee who works an average of at least 30 hours per week, or 130 hours per month.
• FTE Calculation: Calculated by combining the hours of non-full-time employees and dividing by 120.

Who receives a 1095-C?

An ALE must furnish a Form 1095-C to each employee who was a full-time employee for any month of the calendar year, regardless of whether the employee enrolled in coverage or not.

What information is included in a 1095-C?

The form reports two main sections of information:

• Offer of Coverage: Monthly confirmation of whether the employer offered MEC to the employee, their spouse, and dependents. It uses a specific set of IRS codes (Line 14) to indicate the type of offer (or reason for no offer).
• Affordability and Coverage Details: Monthly reporting of the employee's required contribution (premium amount) for the lowest-cost, self-only MEC that provides minimum value (Line 15). It also includes codes (Line 16) to explain why the employer is or is not subject to a penalty for that employee for that month (Safe Harbors).

How does the 1095-C impact employer-shared responsibility?

The IRS uses the data from Forms 1094-C and 1095-C to determine whether an ALE is liable for an Employer Shared Responsibility Payment (ESRP), often referred to as the ACA penalty. An ESRP may be assessed if the ALE:

• Fails to offer MEC to substantially all (at least 95%) of its full-time employees and their dependents.
• Offers coverage that is deemed unaffordable or does not provide minimum value, and at least one full-time employee receives a Premium Tax Credit through the Marketplace.

Comparison of 1095 Forms

The key to distinguishing the forms lies in the issuer and the purpose.

Key differences between 1095-A, 1095-B, and 1095-C

When to use each form

Filing and Compliance

Understanding the difference between 1095-B and 1095-C is paramount to minimizing corporate risk. If you are an ALE, your sole focus for employee reporting is Form 1095-C. If you are a small business with a self-insured plan, your focus is Form 1095-B.

Should you file a 1095 form?

• ALE (50+ FTEs): Yes, you must file Forms 1094-C (transmittal) and 1095-C (employee report) with the IRS and furnish 1095-C to all full-time employees.
• Non-ALE (Fewer than 50 FTEs) with a Self-Insured Plan: Yes, you must file Forms 1094-B (transmittal) and 1095-B (employee report) with the IRS and furnish 1095-B to covered individuals.
• Non-ALE with a Fully Insured Plan: No, the insurance carrier is responsible for filing Form 1095-B.

Could you be required to file two forms?

Yes. This occurs if an ALE sponsors a self-insured health plan. In this scenario, the ALE must use Form 1095-C to satisfy both the employer reporting requirement and the health coverage reporting requirement.

• ALE with Fully-Insured Plan: Files only Form 1095-C.
• ALE with Self-Insured Plan: Files Form 1095-C, using Part III of the form to report the coverage information normally covered by Form 1095-B. This single form covers both reporting duties.

How do you resolve discrepancies in 1095 Forms?

Discrepancies often arise when an employee switches coverage mid-year or when a dependent's SSN is incorrect.

• For the Employer (1095-B/1095-C): If an error is found, the employer must issue a Corrected form to the employee and file a corrected form (or transmittal) with the IRS as soon as possible. Uncorrected errors can lead to IRS inquiries and penalties.
• For the Employee (1095-A): If the information on the 1095-A is wrong, the individual must contact the Marketplace immediately to request a corrected statement.

Due to the significant compliance risks tied to the 1095-C form and the ALE status, HR and financial leadership must prioritize accurate tracking of employee hours, coverage offers, and affordability data throughout the year.