1094-C and 1095-C IRS Forms help the Internal Revenue Service know about a company’s employee healthcare. These forms also help implement the Affordable Care Act (ACA) by letting the IRS monitor the variety and expense of employer-offered health coverage and the number of employees included.
However, the forms are usually for specific large companies, which they use to inform the IRS of their employees’ medical coverage.
The companies must file the 1095-C Forms for all full-time workers throughout the year and send a copy to the workers.
Do All Employers Need to Submit the 1094-C and 1095-C Forms?
The IRS requires Applicable Large Employers (ALEs) to submit the forms. An employer is only considered an ALE when they have more than fifty full-time working employees.
According to the ACA, any employee who clocks in at least 30 hours a week qualifies as a full-time worker. The legislation also counts all part-time workers who work fewer than 30 hours per week as part of the total number of Full-Time Employees (FTEs).
What is the Difference Between IRS Forms 1094-C and 1095-C?
The Form 1094-C and Form 1095-C only have one difference: Form 1095-C is filed and sent to both the IRS and employees.
On the other hand, Form 1094-C is like a cover page that is only sent to the IRS with the following information:
Forms 1094-C and 1095-C help the IRS keep track of an employer’s medical coverage to their employees. So the information provided in these forms determines if an employer is neglecting their duty in providing employees health coverage. If so, then the IRS can penalize the employer.
Moreover, according to health care laws, most people are eligible for health insurance. So, by receiving accurate information on the 1094-C and 1095-C Forms, the IRS can assist employees even if they don’t have the opportunity to get coverage from their employers.
What are the Common Mistakes While Filling Forms 1094-C and 1095-C?
Making mistakes on a 1094-C or 1095-C Form can result in a penalty letter from the IRS. Many employers make various mistakes while completing the forms because they do not read the IRS instructions properly.
But some common mistakes are:
Miscalculating Full-Time Employees
Including ineligible Full-Time Employees in the forms
Using the wrong codes while filing the lines
Not checking all the required boxes
Not forwarding a copy of the 1095-C Form to the employee on time
What is the Correct Formula for FTEs Calculation?
Employers must calculate their FTEs count correctly to avoid getting a penalty. The formula is:
FTE Number + (Total Part-Time Hours/30) = Total FTEs
For example, if a company has 36 employees working full-time hours and 14 employees working 20 hours a week, then the company’s FTE will be:
36 FTEs + (280/30) = 45.333 Total FTEs
(Note: You can get Total Part-Time Hours by multiplying the number of part-time employees with the weekly work hours.)
What are the Deadlines for Submitting Forms 1094-C and 1095-C?
Each employee must receive their 1095-C Forms from their employers before the end of January. If an employer is filing a paper form, they must send it to the Internal Revenue Service by the end of February. However, if electronically filed, an employer gets the deadline to submit until the end of March.
Internal Revenue Service also lets companies with less than 250 1095-C Forms file their forms on paper along with the 1094-C Form. However, a company with more than 250 1095-C Forms must file them electronically.