Ready or Not, ACA Forms Due to Employees by Jan. 31

Prepare workers to receive these new forms, and explain why they’re needed for tax filing

By Stephen Miller, CEBS Oct 16, 2015

Update: Deadlines Extended for ACA Reporting

Employers subject to the Affordable Care Act’s 2015 information reporting requirements were given extra time to give these form to employees and file them with the government. In Notice 2016-4, issued by the IRS on Dec. 28, the agency extended the information reporting due dates. See the SHRM Online article IRS Extends Due Dates for ACA Information Reporting.

The new year will ring in new compliance reporting responsibilities for HR under the Affordable Care Act (ACA). Employers will need to file an array of reporting forms with the IRS reflecting adherence with health care reform’s “shared responsibility” mandate to provide affordable health coverage to their employees. But HR professionals may be less certain about the requirements to provide employees with new ACA disclosures.

Chief among these is the new Form 1095-C, which large employers must provide to their employees annually, along with Form W-2, by the end of January. Form 1095-C provides information for employees to use when completing Line 61 of their individual tax returns, showing that they or their family members had qualifying health coverage (referred to as "minimum essential coverage") for some or all months during the year. The form should be shared with tax preparers and retained with other tax documents.

An overview of the ACA reporting requirements, and tips on how to educate employees to anticipate receiving Form 1095, were provided in an October 2015 webcast sponsored by benefits services firm ADP.

Reminder: Annual Reporting ABCs

“Starting in January 2016, employers with 50 or more full-time or equivalent (FTE) employees must report health insurance information to the IRS and furnish statements about health insurance to their employees annually,” explained Ellen Feeney, vice president and counsel at ADP.

Small employers are exempt from some, but not all, of these requirements:

Small employers (those with fewer than 50 FTEs) with a self-insured health plan must complete and file Forms 1095-B (Health Coverage) and 1094-B (accompanying transmittal form) with the IRS, as well as provide employees—specifically, those who are taxpayers responsible for showing they had health coverage during the year—with a copy of Form 1095-B.

“Form 1095-B is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimal essential coverage and therefore not liable for the individual shared responsibility payment,” Feeney explained.

The 1095-Bs will be provided by insurance companies for fully insured plans.

Applicable large employers (ALEs) with at least 50 FTEs must complete and file Forms 1095-C (Employer-Provided Health Insurance Offer and Coverage) and 1094-C (accompanying transmittal form), and provide each full-time employee with a copy of Form 1095-C.

Small employers with fewer than 50 FTEs also will be required to file Forms 1095-C and 1094-C if they are members of a controlled or affiliated service group that collectively has at least 50 FTEs.

Individuals who receive health coverage through “the Marketplace,” meaning an ACA federal or state health insurance exchange, will receive Form 1095-A (Health Insurance Marketplace Statement) from the Marketplace to allow them to report their premium tax credit and to reconcile that credit on their tax returns. ALEs will be exposed to nondeductibles taxes for every employee who receives a tax credit subsidy to purchase health care on a public exchange.

For the 2015 plan year, forms that must be filed with the IRS are due no later than Feb. 29, 2016 (or March 31, 2016, if filed electronically). But employee copies of Forms 1095-B and 1095-C, if required, must be provided to employees annually by Jan. 31. (The deadline is Feb. 1 for 2016, since Jan. 31 falls on a Sunday.)

Form 1095-C is one of the more complicated disclosures and has therefore received more attention and caused more worry, Feeney explained. It is filed by ALEs and furnished to everyone who has been a full-time employee for one or more months of the calendar year. “ALEs must report that information for all 12 months of the calendar year for each employee,” she noted. Keep in mind:

ALEs must prepare a Form 1095-C for each full-time employee, regardless of whether the employee is participating in an employer-sponsored group health plan, and for each part-time who is enrolled in the employer’s self-insured health plan.

ALEs need not prepare Form 1095-C for part-time employees who are not enrolled in the plan.

For those employers that are subject to the ACA’s reporting requirements, HR professionals and business owners should be gathering the necessary data to meet the early 2016 deadlines. See the SHRM Online article ACA Reporting Requirements: Tips for What’s Ahead in 2016 for more information; additional resources can be found at the SHRM OnlineHealth Care Reform Resource Page.

Preparing Employees for New Disclosures

“Since this is the first year your full-time employees will be receiving a Form 1095-C, a communications plan can contribute to your success,” advised Kimbra Fox, ADP’s vice president for health care reform. “It’s time to start thinking about how you’ll develop and deliver the right tools in conjunction with effective benefits communications and year-end communications to drive awareness and engagement.”

While large employers must be prepared to issue Form 1095-C to their employees by Feb. 1, “It’s very likely that your workforce may not think that they’re impacted by health care reform directly, if at all. And most likely, they’ve never heard about this new Form 1095-C,” Fox explained. “Without an organized and proactive annual reporting communications plan in place, you’re going to hear a lot of questions from employees.”

Since the first time employees will ever see Form 1095-C is in January, “They need to know what it is, what it means and what to do with it,” Fox said.


“The first time employees will ever see Form 1095-C is in January.

They need to know what it is and what to do with it.”


Reaching Out

ACA annual reporting requires employers to identify everyone who has been a full-time employee for one or more months in the 2015 calendar year. These are the individuals employers need to reach out to. “You’re not just communicating to employees in the office or in the field, you also have to communicate with your former employees and COBRA participants as well,” Fox said. “It’s critical that you communicate exactly what Form 1095-C is to your employees and provide them with the information they need to file their 2015 taxes. Increasing their understanding will minimize the possible noise and confusion around annual ACA reporting and decrease calls and inquiries to you and your team.”

Three primary messages to convey to your employees, according to Fox, are:

1. Here’s what to expect. You will receive Form 1095-C for the first time in January 2016.

2. Why you should care. You will need information on the form to prepare your 2015 taxes.

3. Be on the lookout. Watch for the form in your mailbox in January or for it to be delivered by hand at the worksite.

Form 1095-C communications “also provide an opportunity for your organization to paint the bigger picture about ACA and what your overall compliance and benefits strategy is,” she said. Also, “Employees may not know that if you offer them a plan that meets ACA requirements and they go to a public exchange instead and receive a subsidy, they may need to pay it back later,” she noted.

Communication Channels

“Employees like to get information from the Web, but home mailings are still a viable avenue, especially if you have a workforce that doesn’t readily have access to a computer,” Fox said. Ways to connect with employees include home-mailers (postcards and newsletters), e-mail, the company internet, posters throughout the workplace, one-on-one or group meetings, videos/webinars, and FAQ sheets.

“Mix it up and remember that reaching your audience more than once, with more than one vehicle, is ideal,” she advised.

When communicating, “Be clear and concise to gain attention, provide context, make it personal, and leave out the jargon and technical explanations,” she noted.

Timing Is Important

Start your education efforts in the fall, Fox recommended. A suggested timeline of communication efforts could be as follows:

November: Post basics about Form 1095-C on your company intranet—what it is and what employees need to do with it. Feature an article prominently in the employee newsletter. Include “stay tuned” information in open enrollment materials.

December: Send postcards, year-end reminders and e-mails. Create a fact sheet. Put up posters and table tents in break rooms.

January: Send reminder e-mails to be on the lookout for Form 1095-C in the mail, and a follow-up afterward saying it should have arrived.

“There is an opportunity to tap into your marketing communications department to help get the word out,” Fox said.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.​


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