What is a 1095 form? A guide to Form 1095-A, 1095-B, and 1095-C

Business owners tend to have a lot in common, especially when it comes to finances and tax time. One of those things? Trying to figure out the answer to “What is a 1095 form?”

And we don’t blame them. Although 1095 forms are broken down into three forms titled A, B, and C, it’s not always as easy as your 123s.

So, what is a 1095 form? Does every business owner need to submit it at tax time? And if so, how do you do it? Keep scrolling to learn more about what we'll cover to help you feel confident about these three forms. Even the ones you might not need to complete.

Before we get into the details, let’s answer the big question: what is a 1095 form? A 1095 form is a group of documents that are broken down into three forms: 1095-A, 1095-B, and 1095-C.

These forms inform the government which employees are liable for paying a penalty called the individual shared responsibility payment.

Let’s pause here for a brief-but-important history lesson.

Form 1095 was introduced by the Affordable Care Act (ACA) in 2014. Under this act, both employers and health insurance providers are responsible for filling out and submitting the relevant 1095 form annually. This helps the federal government determine three things:

• Whether or not individual employees were eligible for health insurance coverage
• During which months of the year they held coverage
• Whether they received or were eligible for an advanced premium tax credit
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Now, a few years prior—in 2010—the Affordable Care Act was introduced. Under this act, all eligible individuals were required to hold Minimum Essential Coverage (MEC) throughout the year. Spoiler: here’s where the penalty comes in.

If and when individuals opt out of getting health insurance coverage (save for those who had exemptions based on accessibility, affordability, and other factors), they’re required to pay a penalty called the “individual shared responsibility payment,” or more commonly referred to as “individual mandate.” This penalty is based on the individual’s income, time spent without coverage, and a few other factors.

Fast forward almost a decade, and that penalty was repealed for tax years 2019 and later. That said, some states still require individuals to hold coverage or pay a penalty. Which brings us back to 1095 forms.

1095 forms are there to let the government know which employees are liable for paying the individual shared responsibility payment—aka the penalty.

Form 1095-A is a marketplace insurance statement. It’s sent by both state and federal marketplaces to individuals who had marketplace coverage for the year—not the IRS. You can also find it online.

Here’s why it’s important: if you received any advance payments of the Premium Tax Credit (APTC) to financially support your health insurance coverage throughout the year, this form lets you know if you received too much or too little. You’ll want to keep your 1095-A forms with your other tax forms, like W-2s.

Did you have marketplace coverage but didn’t get the Premium Tax Credit? The form is still needed. You’ll use it if you do want to claim the APTC.

Form 1095-B verifies that individuals do in fact have health insurance that provides the Minimum Essential Coverage (MEC) throughout the year. Consider it to be a form of proof, pardon the pun.

Form 1095-B also includes information on the type of coverage, period of coverage, and any dependents covered by employer-provided health insurance plans. It’s filed and provided to employees of small employers (fewer than 50 full-time employees), among other entities, who offer health insurance.

Form 1095-B is also filed by private insurance companies outside the Marketplace, government agencies (like Medicare and CHIP), and other coverage providers.

Form 1095-C is similar to 1095-B—it reports on the health insurance coverage offered by employers. It also details a month-by-month report on whether or not employees participated in that coverage.

The main difference between Form 1095-C and Form 1095-B is that Form 1095-C is used by larger employers (those with 50 or more full-time employees).

This form might look familiar if you’ve been employed by a company with more than 50 employees since the Affordable Care Act took effect, as it’s probably the one you received in the mail. Its job is to let the federal government know if an individual had any gaps in coverage and whether they’re liable for paying the individual shared responsibility payment— also (less-lovingly) referred to as the penalty.

Wondering if you need to submit a 1095 form? Well, maybe…or maybe not. These aren’t really the kind of form that every employer needs to file, but there are a few rules that can help you determine if it’s a requirement for you.

In brief, business owners/employers must file either Form 1095-B or 1095-C if:

• You had at least one full-time W-2 employee during the prior year AND
• You provided self-insured health insurance coverage to employees
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If you’re required to file one of the 1095 form variations, you’ll have to send a copy to both the IRS and to each of your employees. If your business employs more than 50 full-time (or full-time equivalent) employees, then you’ve got to file 1095-C forms for each employee—even for those employees who said no to coverage.

Now onto some Form 1095 specifics, like terminology.

Regarding Form 1095, there’s an important distinction to be made between health coverage “providers” and “sponsors.” Here’s what we mean:

• A sponsor is whoever arranges the health coverage. For example, if somebody receives health coverage through their job, the employer is considered the sponsor.
• A provider is a company or organization that actually pays the medical bills themselves.
• In most cases the provider would be an insurance company, in which case the insurer must send out the 1095-B form.
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If you’re a self-insured employer, you’re considered to be both a sponsor and a provider. In that case, you, the employer, would send out the 1095-B.

Let’s break it down some more. If you and your employees pay premiums to an insurance company called Hello Insurance, that company—Hello Insurance—is the provider. Therefore, Hello Insurance is responsible for sending out 1095-B forms to your employees… which means you can stop licking those envelopes now.

However, if you choose to self-insure—meaning, instead of premiums, you pay employees’ medical bills yourself—then you are the provider. And if that’s the case, you are responsible for filing and sending out 1095-B forms. Better buy some stamps! 📫

Why employers are required to file 1095 forms

Employers and other health insurance providers are required to file 1095 forms as a result of the introduction of the Affordable Care Act (ACA)—which was passed on March 23, 2010. Under the ACA, all eligible individuals were required to hold Minimum Essential Coverage (MEC) throughout the year.

When individuals choose not to get health insurance coverage (with exemptions for accessibility, affordability, and other factors), they pay a penalty called the “individual shared responsibility payment” (often called the “individual mandate”). The penalty is based on the individual’s income, time spent without coverage, and other factors.

The federal individual mandate was repealed for tax years 2019 and later—however, some states still require individuals to hold coverage or pay a penalty.

1095 forms let the government know which employees are liable for paying the individual shared responsibility payment.

There are one of two 1095 Forms that you might have to file: Form 1095-B or Form 1095-C. If you employ less than 50 full-time employees, and you also provide them with self-insured health insurance coverage, you’ll be filling out Form 1095-B.

But remember: employers with fewer than 50 full-time employees aren’t always required to offer health insurance coverage. However, if you do offer benefits, well, you might see some benefits. Especially in hiring. Offering coverage is a competitive advantage during the recruitment phase of a business, plus it can offer some tax benefits when you file.

More than 50 full-time employees? You’re required by law to both provide Minimum Essential Coverage (MEC) and to file Form 1095-C.

Onto the “f word”: you know, filing. Before you grab a pen to fill out 1095 forms, you’ll first need to have the following information ready.

• Your own company details (trade name, employer identification number or EIN, etc.)
• The insurance company who provided the coverage
• The name of each employee on your insurance policy
• Names of each person (including dependents) covered under the policy
• The months during which each person was covered
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Having this info at hand speeds up the process, plus makes the whole process a little more organized, and a whole lot less frantic. Trust us on this one: you don’t want to put a pause on filing in order to search your cabinets for the hiring details of your employees.

And here’s why: once you have the right info at the ready, 1095 forms are actually super simple to fill out. 🙌

All you need to do is fill in the information of your employees and their dependents, then check the box for each month they held coverage with you.

See? We told you it was simple.

What is the difference between a 1095 form and a 1094 form?

Now that we understand the answer to what is a 1095 form, we can answer another burning-business question: what’s the difference between a 1095 form and a 1094 form?

The answer? If Form 1095 is a report, then a 1094 form is its cover sheet.

Let’s review.

Form 1094-B and Form 1094-C are called “transmittal” forms—essentially cover sheets that employers and health insurance providers must use when filing their accompanying 1095 forms. They give a detailed overview of the employer’s information and contact information, how many employees were covered, and how many 1095 forms you’re filing.

In essence, Form 1094 makes it easier for the IRS to process all of the information a bit more efficiently—kind of like how an HR professional would review a cover letter to get an understanding of the person they’re looking at before they dive into the 3-page resume and portfolio.

The short answer: annually. IRS Forms 1095-B and 1095-C are both annual filings, which means that employers and health insurance providers who are required to submit 1095 forms have to do so just once a year. (We know: phew.)

For most businesses, the due date to employees is February 28, and also due to the IRS by February 28 (if filing on paper). If you’re filing electronically, the date is March 31 of each year.

Remember when we mentioned those envelopes and stamps? Fear not. If you have a phobia of snail mail, there are a few other options when it comes to submitting Form 1095.

E-file

This is an accurate, secure, and speedy way to submit your forms. In order to file Form 1095 (or any other IRS form) online, you’ll need to either use tax software or work with a tax professional who’s an authorized e-file provider.

Here’s some handy lists of approved software and authorized e-file providers that the IRS has put together so you can choose the best option for you and your business.

Mail in

Good ol’ snail mail. Both small businesses and employers have the option to mail in their Form 1095. However, keep in mind the deadline of February 28—not March 31.

To submit via mail, first print the applicable Form 1095. You’ll mail this, plus the 1094 form (your cover sheet), to the corresponding address for your state. You can find the correct mailing address on page 4 of the Instructions for Form 1095-B, or on pages 3 and 4 of the Instructions for Form 1095-C.

Via an accountant

Ah, the accountant, tax professional, or CPA: often your best option for filing Form 1095. These pros are well equipped to fill out and file any necessary variation of Form 1095, and will do the same for the applicable 1094 form, too.

That said, you’ll still need to have your information on hand so they can complete the forms as accurately as possible.

In a nutshell, 1095 forms (B and C) are a must-file for you, the business owner, if you’ve had at least one full-time W-2 employee working in the year prior, and also provided self-insured health insurance coverage to said employee(s).

Forms are required to be submitted just once a year—February 28 by mail, or March 31 electronically—and are surprisingly easy to fill out. That is, if you have your employee information organized, and company and insurance information organized and at-the-ready.

But if you do have questions, our Wave Advisors are here to help. Reach out for the 4-1-1 on 1095s anytime. But try to do it before those deadlines, okay? 🙏