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An In-Depth Look at the Mandatory 1095 Forms for ACA Reporting

An In-Depth Look at the Mandatory 1095 Forms for ACA Reporting

ACA reporting requires careful attention to detail, accurate record-keeping, and timeliness. If your HR representative doesn’t get everything right, your business will likely end up paying unnecessary and frustrating penalties. 

Some of these penalties are per employee, which means large employers can really feel the pain of a mistake!

Understanding the Role of the 1095 Form

A 1095 form is what tells the federal government what health insurance coverage you are providing to your employees. There are three forms in this category: 1095-A, 1095-B, and 1095-C. Each of them plays a slightly different role when it comes to documenting health insurance coverage. 


This form is provided to individual employees by the insurance company itself. If an employee has purchased insurance from an official ACA health care exchange, they will be provided with a 1095-A form, which includes their name, the amount of coverage they receive from their plan, and information about any of the tax credits they are entitled to. 

This form also provides information about how much the employee paid for coverage. 

Taxpayers use this form to file their income taxes, adjust their credit payments, and claim tax credits. 


Although the 1095-B form is familiar to some employees, others will never see it. That’s because this form is only provided to people who work at companies with fewer than 50 full-time employees. 

These small businesses send the 1095-B form to any employer who is utilizing their health insurance plan. It includes information about the type of coverage the employee has, details associated with any covered dependents, and dates for the period of coverage. 


This is the form that larger businesses must be especially careful about. This form is used by companies with 50 or more full-time employees, and it confirms that they are fulfilling their obligation to provide health insurance coverage to their workers. 

It will include the employee’s name, the employer’s name, the range of months that the employee was eligible for coverage, and the cost of the cheapest monthly premium that could have been paid under the employer’s plan.

If your company fails to provide appropriate health insurance coverage, employees will be informed of this from the 1095-C they receive. 

Important: These Forms Must Also Be Provided to the IRS

In addition to providing these forms to your employees, you must also provide the same information to the IRS. This ensures that everyone has access to the same accurate dates, numbers, and other information. 

Determining Which Form is Right For Your Company

So, which form are you required to provide to your workers? 1095-B or 1095-C?

The answer comes down to the number of full-time employees (FTEs) you have in your employment. Any company with fewer than 50 FTEs can use form 1095-B, because these companies are not required to provide health insurance coverage. 

However, if your company has 50 or more FTEs, you are required to provide 1095-C to prove that you are fulfilling your health insurance coverage obligation. These companies are called Applicable Large Employers (ALEs). 

Penalties for Non-Compliance

What kind of penalties will you face if you are an ALE, but you don’t provide the IRS or your workers with the required 1095-C forms? 

The IRS assigns reporting penalties for incorrect, late, and missing forms. If you provide your employees with incorrect forms, or you provide them after the required date, you will face a $280 fee per employee. 

The same fee applies if you are incorrect or late in submitting these forms to the IRS. That means that if you make mistakes when providing these forms to both the worker and the IRS, there is a potential for up to $560 in fines per employee. 

A company with 50 FTEs could face penalties up to $28,000 for making mistakes or falling behind in their filing processes. 

Avoiding Costly Mistakes

One way to avoid making costly mistakes is to put your trust in a payroll professional. Payroll professionals take the stress and guesswork out of ACA filing. Complete Payroll’s ACA Compliance Services are comprehensive. We pair companies with a subject area expert who understands the complexities of the employer’s industry and ACA obligations. 

Everyone wants to avoid unnecessary fines and penalties. Getting your 1095 forms submitted accurately and on time is the best way to prevent these costly mistakes. 

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