What you should tell employees about ACA’s Forms 1095

Compliance with the Affordable Care Act has been been top-of-mind for Finance pros for months now. That’s probably not the case for your average worker.  

But these forms play an important part in individuals’ tax-preparation process. So with the tax deadline approaching, you’ll probably want to make sure your employees know why they’re receiving Forms 1095 and what they should do with them.

A, B, C or a combo

Here’s a rundown from BenefitsPro.com:

For the 2015 plan year, employees will receive Form 1095-C, B or A. Most workers will receive Form 1095-C, a new government form that employers with 100 or more full-time employees (or FTEs) are required to furnish no later than March 31, 2016.

The form essentially tells the IRS if the “shared-responsibility” requirement was met as well as if the employee or family qualifies for a Premium Tax Credit.

Self-insured employers with 50 or fewer employees will distribute Form 1095-B for basically the same purpose larger firms use Form 1095-C. Some employees will receive both a 1095-C and a 1095-B, depending on how their employer’s plan is set up.

Form 1095-A only applies to individuals who purchased their coverage through the ACA exchanges.

Important but not needed

Even with regular communication on the ACA’s impact, you’re bound to have a few staffers who come to you with questions about Forms 1095. Let them know the forms are like their W-2s and 1099s and they should be included with the documents they provide to their tax preparer or retained (in case of IRS follow-up /audit) if they prepare their own taxes.

But most workers don’t need Form 1095 to file. According to the IRS: If you are expecting to receive a Form 1095-A … you should wait to file your 2015 income tax return until you receive that form. However, it is not necessary to wait for Forms 1095-B or 1095-C in order to file