The Affordable Care Act (ACA) has introduced fundamental changes in how businesses provide their employees with health insurance, from new standards regarding how employee eligibility for coverage is determined to adhering to ever-changing reporting requirements and increased penalties for companies that fail to comply. While much of the focus has centered on the impact for employers, the ACA has introduced significant changes for employees, as well – most notable is the introduction of Form 1095-C, which includes information about health care coverage offered and/or provided by employers to their employees. These forms are very important to employees for two reasons:
- The IRS will use the information reported on the 1095-Cs to help determine whether employees are subject to fines under the individual mandate; and
- The IRS will use information reported on the 1095-C to help determine eligibility for employees’ premium tax credits.
Like any procedural change, informing employees of new processes can be challenging. But as Form 1095-C involves something so personal – the health care your employees and their families receive – it is essential that you communicate these changes and their impact effectively. As 2016 is the first year the form will be required, companies must develop an effective plan to let employees know what the form is about and why they are receiving it. The use of emails, physical postcards and voicemail or text alerts to communicate information about Form 1095-C will all help with communications to employees. Given the importance of the form, it is better to over-communicate than open the possibility that some employees will be left in the dark.
Top Employee Questions About Form 1095-C
With the new year upon us, now is the time for companies to share Form 1095-C with eligible employees. Although the deadline was recently extended from February 1 to March 31, 2016, employers are encouraged to share the forms with their teams as soon as they are ready. Because your employees will likely have numerous questions about the form and what they need to do with it, it is a good idea to prepare ahead of time so your team can address those concerns. Consider the following questions your employees may have about the Form 1095-C and suggestions as to how you might answer them.
Why did I get a Form 1095-C?
Employees working full time, for an average of 30 hours or more per week, and enrolled in health insurance through their employer at any time throughout 2015 will receive the form.
Why didn’t I get a Form 1095-C?
Employees not working full time and not carrying health care coverage through their employer at any time in 2015 will not receive a 1095-C. Employees who are not the primary insured individual in their household also will not receive a 1095-C.
What information is on the form?
The Form 1095-C is divided into three sections, the first of which reports information about you and your employer. The second includes information about the coverage offered to you by your employer, the affordability of that coverage and why you were or weren’t offered coverage. The third section presents information about the individuals covered under your plan, including any dependents.
Why was Part 3 (the third section) of the form left blank?
Part 3 of Form 1095-C could be left blank for several reasons, including the employee not being enrolled in coverage through the employer for any month of 2015. Additional reasons could be having coverage through a fully insured plan, being covered through COBRA or being a union employee.
What should I do with my 1095-C?
Keep your 1095-C for your records with your other important tax documents. While you will not need to attach your 1095-C to your tax return or send it to the IRS, you may use information from your 1095-C to help complete your tax return.
How will 1095-C impact my taxes?
Form 1095-C is used to verify that you were offered health insurance coverage by your employer. If you did not elect to be covered and do not qualify for an exemption, you may be subject to a fine when you file your 2015 tax return. Or, if there’s a discrepancy in the information that you and your employer report to the IRS about the health care coverage offered to you, your tax return may be delayed.
While the above are some of the most common questions your employees may have around Form 1095-C, it is inevitable that more questions will arise. Designating a dedicated resource to serve as the contact person regarding the form will help employees know to whom they can turn with their questions. Moreover, providing regular communications by way of educational inserts in new-hire packets, employee handbooks and benefit enrollment materials will help keep your team educated about this new process today and going forward.
Preparing for Form 1095-C Success
As companies around the country prepare for these regulations introduced by the ACA, it is crucial that you set the tone for your employees so they have the information they need to comply. Having a plan to communicate why they are receiving the form, when they will receive it, what they must do with it and their resource for additional guidance is crucial to an effective strategy. As a result, you and your team can approach these latest regulations with confidence and in full compliance.