Form 1095-C Guide for Employers: ACA Reporting Requirements

For startups and scaling agencies, hitting the 50-employee mark is a major milestone—but it also triggers new regulatory responsibilities under the Affordable Care Act (ACA). One of the most critical is Form 1095-C. This form is your way of proving to the IRS that you’ve provided affordable health insurance to your team, helping you avoid massive non-compliance penalties.

What is Form 1095-C?

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, is an annual report that Applicable Large Employers (ALEs) must provide to their employees and the IRS.

It serves two primary purposes:

1. For the IRS: It confirms your company met its "employer shared responsibility" by offering Minimum Essential Coverage (MEC).

2. For Employees: It helps them determine if they qualify for premium tax credits when filing their personal returns.

Who Needs to File?

You are required to file Form 1095-C if your company is an Applicable Large Employer (ALE).

• The 50-Employee Rule: If you employed an average of 50 or more full-time employees (including full-time equivalents) during the prior calendar year, filing is mandatory.

• Smaller Businesses: If you have fewer than 50 employees, you generally do not need to file Form 1095-C, though your health insurer might file Form 1095-B on your behalf.

Important Deadlines and Penalties

Missing these dates can be a costly mistake for a growing company.

The Cost of Non-Compliance (2024/2025)

• Failure to File/Provide Correct Forms: $310 per form, with a maximum cap of over $3.7 million.

• Intentional Disregard: $630 per form with no maximum cap.

Step-by-Step: How to Fill Out Form 1095-C

Part I: Employee and Employer Information

This section is straightforward but requires absolute accuracy.

• Lines 1–6: Employee's name, SSN, and address. Ensure the SSN matches your payroll records to avoid IRS mismatches.

• Lines 7–13: Your company’s name, EIN, address, and a contact phone number.

Part II: Employee Offer of Coverage

This is the most technical part of the form and where most errors occur.

• Line 14 (Offer Code): Enter the 2-character code (1A–1S) that describes the type of coverage offered. For example, 1E indicates coverage was offered to the employee, their spouse, and their dependents.

• Line 15 (Employee Contribution): Enter the monthly cost for the lowest-cost, self-only plan offered to that employee. If the coverage was free, enter "0.00."

• Line 16 (Safe Harbor Code): Use these codes (2A–2I) to tell the IRS why you aren't liable for a penalty for that employee (e.g., they weren't full-time or they enrolled in the plan).

Part III: Covered Individuals (Self-Insured Plans Only)

If your startup is self-insured, you must complete this section.

• List every individual covered by the plan, including the employee’s dependents. 

• Provide their SSN or date of birth and check the boxes for the months they were covered.

Common Mistakes Founders Make

1. Data Mismatches: Using incorrect SSNs or names that don't match Social Security records.

2. Wrong Codes: Misinterpreting Part II codes, such as coding a month as "no offer" when the employee simply declined a valid offer.

3. Missing Part III: Forgetting that self-insured plans require dependent information that isn't always in the standard payroll file.

FAQs

Q: Do I need to file for part-time employees?

A: Generally, no, unless they were actually enrolled in your self-insured plan. However, part-time employees do count toward your "Full-Time Equivalent" (FTE) total when determining if you are an ALE.

Q: What if I have multiple companies (EINs)?

A: If the companies are part of a "Controlled Group," you must aggregate the employees across all companies to determine your ALE status.

Master Your ACA Compliance with Haven

Managing 1095-C filings while scaling a business is a distraction you don't need. Haven provides founder-friendly tax support that integrates directly with your bookkeeping and payroll. 

• Automated Data Sync: We centralize payroll and benefits data to make form generation seamless.

• Expert Review: We ensure your Part II codes are accurate to protect you from IRS penalties.

• Timely Filing: We handle the electronic submission to the IRS and distribution to your team