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Decoding Form 1095-C: A Taxpayer’s Guide

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, doesn’t directly translate into a tax liability or refund calculation. Its primary purpose is to inform you and the IRS about the health insurance coverage offered to you by your employer, satisfying requirements under the Affordable Care Act (ACA).

How to Report Form 1095-C on a Tax Return

Here’s the kicker: you generally don’t directly report the information from Form 1095-C on your tax return. You don’t need to attach it to your return or enter specific details from the form onto specific lines of the 1040. Instead, keep it for your records.

The form serves as proof that you and your family had access to qualifying health insurance coverage during the tax year. This is essential because, under the ACA, most individuals are required to have minimum essential coverage (MEC), although the penalty for not having it was effectively eliminated starting in 2019. While there’s no longer a federal mandate penalty, some states may still have individual mandates, so it’s always a good idea to keep these documents for your records.

Essentially, the 1095-C supports your attestation that you either had MEC for the entire year or qualified for an exemption. If you’re claiming the premium tax credit (PTC) due to purchasing insurance through the Health Insurance Marketplace, then you’ll use Form 1095-A instead.

Frequently Asked Questions (FAQs) about Form 1095-C

1. What is the purpose of Form 1095-C?

Form 1095-C serves two main purposes:

It informs you whether your employer offered you minimum essential coverage (MEC) during the tax year.
It provides the IRS with information about the health insurance coverage offered to employees, ensuring compliance with the Affordable Care Act (ACA).

2. Do I need to attach Form 1095-C to my tax return?

No, you do not need to attach Form 1095-C to your federal tax return. Keep it for your personal records. Some states, particularly those with their own individual mandates, may have different requirements.

3. What if I received Form 1095-A instead of Form 1095-C?

Form 1095-A, Health Insurance Marketplace Statement, is different. If you purchased health insurance through the Health Insurance Marketplace, you’ll receive Form 1095-A. This form is used to reconcile any advance payments of the premium tax credit (PTC) you received. You’ll use information from Form 1095-A to complete Form 8962, Premium Tax Credit (PTC), and file it with your tax return.

4. What does “Minimum Essential Coverage (MEC)” mean?

Minimum Essential Coverage (MEC) refers to a type of health insurance coverage that satisfies the individual mandate requirement under the Affordable Care Act (ACA). Most employer-sponsored plans, government-sponsored plans (like Medicare and Medicaid), and individual health insurance policies count as MEC.

5. My Form 1095-C is incorrect. What should I do?

If you believe there’s an error on your Form 1095-C, contact your employer immediately. They are responsible for issuing corrected forms. A common error is an incorrect Social Security number or incorrect months of coverage. Make sure to have the corrected form before filing your taxes.

6. What do the codes in Part II, Line 14 of Form 1095-C mean?

Line 14 of Form 1095-C uses codes to indicate the type of offer of coverage your employer made to you. Here are a few common codes:

1A: Minimum essential coverage offering minimum value offered to you, with employee required contribution at or below 9.5% (as adjusted) of mainland single health coverage premium.
1H: No offer of coverage.
1E: Minimum essential coverage offering minimum value offered to you and your dependent(s).

These codes are important for the IRS to understand the specifics of the coverage offered by your employer. The percentage used in code 1A is indexed each year and you should review the most recent guidance from the IRS.

7. What do the codes in Part II, Line 16 of Form 1095-C mean?

Line 16 of Form 1095-C uses codes to indicate why the employer is not liable for the employer shared responsibility payment or to provide additional information about the coverage offered. Examples of these codes are:

2C: Employee enrolled in coverage offered.
2D: Employee in a waiting period.
2G: Employee not a full-time employee.

These codes provide context and help the IRS determine if the employer met its obligations under the ACA.

8. What if I didn’t have health insurance for the entire year?

While the federal penalty for not having minimum essential coverage (MEC) has been eliminated, it’s still important to understand your options. If you didn’t have MEC for the entire year, you might have qualified for an exemption. Some states may still have individual mandates and penalties. Investigate these state-specific requirements.

9. I work multiple jobs. Will I receive multiple Form 1095-Cs?

Yes, you will receive a Form 1095-C from each employer who offered you health insurance coverage. Keep each form for your records.

10. What if I never received a Form 1095-C?

Your employer is required to furnish you with Form 1095-C by a specific deadline (usually early in the year). If you haven’t received it, contact your employer’s HR department. They can provide you with a copy or explain why you might not have received one (e.g., you weren’t eligible for coverage).

11. How long should I keep Form 1095-C?

It’s generally recommended to keep tax-related documents, including Form 1095-C, for at least three years from the date you filed your return or two years from the date you paid the tax, whichever is later. This aligns with the IRS statute of limitations for auditing tax returns.

12. Does Form 1095-C affect my state taxes?

The impact of Form 1095-C on your state taxes depends on whether your state has its own individual mandate for health insurance. Some states have implemented their own requirements, and you might need to provide information related to your health insurance coverage when filing your state tax return. Review the requirements for your specific state.