Affordable Care Act – Explained

Affordable Care Act

With Affordable Care Act (ACA) aka Obamacare in place certain employers are required to offer health insurance coverage to their full-time employees. These employers should send an annual statement to all the employees eligible for this coverage. The statement describes the insurance available for them.  Internal Revenue Service (IRS) Form 1095-C is used as that statement.

Who should file Form 1095-C?

The ACA clearly defines which employers have to offer health insurance to their employees. ACA refers to them as “applicable large employers,” (ALEs). A company/organization is an ALE if it has minimum 50 full-time employees. Full-time employee, as per ACA, is someone who works minimum 30 hour/week. Only ALEs are required to file Form 1095-C.

What is 1095-C
Employee of an ALE who is eligible for insurance should receive the form 1095-C. Eligible employees but declining to participate in employer provided health plan will still receive a 1095-C. The form typically includes:

  • Details of the employee and the employer.
  • Months of the accounting year the employee was eligible for insurance.
  • Cheapest premium cost that the employee could have paid.

1095-C will indicate the fact if an ALEs does not offer its employees with insurance coverage. But such ALEs may be subject to financial penalties.

When does 1095-B comes into picture

Where 1095-C only describes what kind of insurance coverage was made available to a full-time employee, form 1095-B contains the details about the employee’s actual coverage, including the details of the employee’s family dependents that are included in this insurance coverage. Form 1095-B is sent out by the insurance provider and not the employer.

Some companies pay medical bills for their employees themselves, meaning they are self-insured-

  • For such cases employer is the insurance provider, so it will send out 1095-B forms.
  • For such cases “B” and “C” forms can be combined and sent together by the employer.

When 1095-C is supposed to go
Starting 2015 tax year sending out 1095-C forms has been made mandatory. Employers have to send these out to their full-time employees and also to the IRS. Employees should receive them by the end of January — so in January 2016, forms for 2015 tax year will be sent.

Employers filing paper forms will have time till February 2016 and if they are filing electronically will have time till March 2016. Employers having employees 250 or more have to file the forms to IRS electronically only and those who have full-time employees less than 250 have the option to file in paper or electronically. Dates have to be maintained strictly to avoid any kind of penalty from IRS.

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