Navigating tax forms can be a daunting task for businesses, especially when it comes to ensuring compliance with the difficult-to-navigate Affordable Care Act (ACA) reporting requirements. One of the most critical forms you need to know about is Form 1095. In this guide, we’ll cover everything you need to understand about Form 1095, including what it is, who needs to file, and how to make the process as seamless as possible.
Failure to File Form 1095, and corresponding Forms 1094, can lead to extremely stiff penalties of up to $310 per employee statement in 2024, capped at a maximum of $3,783,000. Therefore, we strongly recommend you educate yourself about Form 1095 to ensure compliance as the IRS has ramped up enforcement efforts.
Form 1095 is a series of documents used to report health insurance information. It ensures compliance with ACA regulations, helping the IRS determine if employers are offering qualifying health coverage to their employees.
There are three variations of the form, each with a specific purpose:
1. Employers with 50+ Full-Time Employees (ALEs)
If your business has 50 or more full-time employees (or full-time equivalents), you are classified as an Applicable Large Employer (ALE) and must file Form 1095-C. This form reports:
2. Health Insurance Providers and Small Employers
Insurance companies and small employers offering self-insured health plans are required to file Form 1095-B to report:
3. Health Insurance Providers and Small EmployersIndividuals Purchasing Market place Plans
While this falls outside employer responsibilities, individuals who purchase insurance from the Health Insurance Marketplace will receive Form 1095-A for their personal tax filings.
Missing the filing deadlines for Form 1095 can result in steep penalties. Here are the dates to keep in mind:
Non-compliance can lead to significant fines. For 2024, the IRS penalty for failing to file correctly is $310 per form, with a maximum annual penalty of $3,783,000. Additionally, businesses risk ACA penalties if they fail to offer affordable health coverage to employees, ranging from $2,970 to $4,460 per employee depending on the violation.
1. Collect the Necessary Information
Employee information (name, address, and Social Security Number).
Details of the health coverage offered (type, duration, and cost).
1. Complete the Forms
Form 1095-B: Focuses on individual coverage details.
Form 1095-C: Includes detailed information about coverage offered to each employee and whether it meets ACA requirements.
3. Submit the Forms
Distribute copies to employees.
File with the IRS either electronically or via paper forms.
If managing ACA compliance sounds overwhelming, you’re not alone. Filing Form 1095 requires attention to detail, and the consequences of mistakes can be costly. There are several options for complying with Form 1095, including leveraging your current payroll or benefits provider, which may often come at high-costs and less-than-to-be desired technology and service.
There are also a variety of “do-it-yourself” (DIY) solutions that can be extremely cost-effective and efficient for small-to-medium sized businesses that must comply. That’s why TaxNow has partnered with 1095EZ.
1095EZ is a trusted service that helps businesses:
By utilizing 1095EZ, you’ll save time, reduce stress, and have peace of mind knowing your business is fully compliant with ACA regulations.
Filing Form 1095 is a crucial step in ACA compliance, but it doesn’t have to be a burden. Understanding your responsibilities as an employer and using a service like 1095EZ can simplify the process and help you avoid costly mistakes.
Need help filing your 1095 forms? Visit 1095EZ.com to learn more about how their services can support your business.
