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Understanding of Form 1094-C
Form 1094-C ACA mandates applicable large employers to report Forms 1095C. This is filed by employers who provide health insurance coverage to their employees. As such, it acts as a transmittal statement that should be sent with the 1095-C that conveys specific details regarding the health insurance to which individual employees are eligible.
What Is Form 1094-C?
Reported on 1094-C tax form, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, is summary information for each Applicable Large Employer (ALE) member. It’s also a way for employees to send their 1095-C forms to the IRS.
Applicable large employers, meaning those with at least 50 full-time employees and full-time equivalent employees in the prior year, file Form 1094-C and send copies of Form 1095-C to the IRS.
Section 6055 and section 6056 details are reported on Forms 1095-B or C under IRC sections for each person covered by minimum essential coverage during these months.
In combination, these forms assist the IRS in administering any potential liability for an ALE Member under the employer shared responsibility provisions of 4980H and help determine whether an employee is eligible for the premium tax credit.
Use of Form 1094-C
1. Report Full-Time Employees
The Form 1094-C serves as a summary of the total number of full-time employees, the months each had worked in such capacity, and whether that employee was offered minimum essential coverage (MEC).
2. Report Employer Information
The 1094-C is filed with the IRS, letting them know that an Applicable Large Employer provides health care.
3. Certify Compliance
Form 1094-C is the statement indicating that an employer has met ACA reporting mandates by providing appropriate and affordable health insurance to all full-time employees.
Explaining Form 1094-C
Part I: Employer Information
This part is where you will provide some general business information about the employer, such as the company name, address, and EIN.
ALE Information
The section acknowledges that the employer is eligible to receive any ACA transitional relief. It would also require reporting the total number of Form 1095-C transmitted, grouped with an aggregated group.
Part III: Full-Time Employee Count and Coverage
Employers must report the months that they had full-time employees and whether or not minimum essential coverage was offered.
Part IV: Members of the Aggregated ALE Group
If the employer is a member of an aggregated ALE group, this section calls for identifying the names and EINs of other members of that group.
Use of Form 1094-C
- Report Employer Information: This form 1094-C is used to report to the IRS whether major employers offer health insurance coverage to their employees.
- Report Full-Time Employees: This form is where you indicate how many full-time employees there are each month, and whether they have been offered minimum essential coverage (MEC).
- Certificate Compliance: This is proof to demonstrate compliance with the employer’s mandate required by the ACA that includes providing all full-time employees with sufficient and affordable insurance.
Explaining Form 1094-C
- Part 1: Employer Information: In other words, the employer’s first section will require all of the basic information on your employer, who they are, and where their business is.
- Part 2: ALE Information: This part contains the employer’s assertion of its eligibility for the transition relief under the ACA. The form also requests the employer provide how many 1095C forms were filed and if the employer is in a group.
- Part 3: Full-time Employee Count and Coverage: Employers report on a monthly basis the number of full-time employees they have, and whether or not minimum essential coverage is provided.
- Part 4: Members of Aggregated ALE Group: Name and EINs for the other group members must be provided.
The Formula For Form 1094-C And 1095-C
To determine if an employer is an ALE for purposes of filing Form 1094-C and Form 1095-C, the following calculation is employed:
Full-Time Employee Count + (Total Part-Time Hours ÷ 30) = Full-Time Equivalent (FTE) Total
This calculation is the sum of full-time employees and full-time equivalent employees FTE, calculated by aggregating part-time hours worked in a month for all employees/attribution group/insured members in its final form.
Filing Requirements of the 1094 Form
Who must file? Generally, employers that have at least 50 full-time employees (including full-time equivalent employees) are ALEs. They are required to file Form 1094C and an individual 1095C for each employee.
Deadlines: Generally, Form 1094C (on paper) is filed, and the deadline is sometime around the end of March (paper filing).
Who Needs to File Form 1094-C?
An employer is considered to be an ALE if it had 50 full-time employees (including FTEs) for the previous calendar year.
A full-timer under the Affordable Care Act (ACA) is typically someone working at least 30 hours a week.
Part-time employees also have to be counted toward ALE status (or at least enough of them so that the sum of their hours worked in a given month comes out to the equivalent of full-timers, allowing you to determine if you’ve crossed that 50-employee mark).
Employers that are considered ALEs file Form 1094-C (2018 – 2020) with the IRS along with Form 1095-C (2015-2020), which is a series of codes used to report whether an employer offered health coverage to full-time employees and, if so, which employees were enrolled in that coverage. This reporting is used to enforce the employer shared responsibility provisions of the ACA.
Also, See: Form 1099-SA | Form 5498-SA | Form 8832 | Form 940 | Form 942
