Form 1094-C

If you’ve been involved in managing or providing employer health benefits, you’ve probably heard about various tax forms and reports. One important form that often comes up is Form 1094-C. But what is it exactly, and why should small business owners, HR managers, and employees care about it? In this article, we’ll break down the basics of Form 1094-C, explain its role in health benefits reporting under the Affordable Care Act (ACA), and help you understand how it affects your business or your benefits.

What Is Form 1094-C?

Form 1094-C is what the IRS calls a transmittal form. Think of it as a cover sheet that employers submit when they file a set of related tax forms known as 1095-Cs. These forms together report the health coverage offered to full-time employees for a given tax year.

Why Does This Matter to Employers?

Employers with 50 or more full-time equivalent employees (referred to as Applicable Large Employers, or ALEs) are required by the ACA to offer affordable, minimum essential health insurance coverage to their full-time employees. The Form 1094-C, along with Form 1095-C, helps the IRS ensure employers are complying with this requirement.

Here’s what Form 1094-C does:  

• Summarizes total employee counts and the number considered full-time  
• Details the employer’s health insurance offerings  
• Transmits copies of the 1095-C forms to the IRS, which show individual employee coverage  
• Identifies which parts of the ACA employer mandate the company is meeting  

What About Small Businesses That Aren’t Large Employers?

If you run a small business with fewer than 50 full-time equivalent employees, you generally don’t have to file Form 1094-C or 1095-C. However, it’s still useful to understand these forms because they inform the broader discussions around employer health coverage and potential alternatives you might consider, like Individual Coverage Health Reimbursement Arrangements (ICHRAs) offered through platforms like SimplyHRA.

Who Fills Out Form 1094-C and When?

Form 1094-C is typically prepared by the employer’s payroll or HR department, sometimes with help from a tax professional or benefits provider. The form is filed annually with the IRS, usually by the end of February or March, depending on whether filing electronically or by mail.

Some key points to keep in mind:  

• The form must be filed even if no employees were covered that year, or if the employer didn’t offer health coverage.  
• It pairs with multiple 1095-C forms, each corresponding to individual employees.  
• Electronic filing is required for employers submitting 250 or more 1095-Cs.  

How Does Form 1094-C Affect Employees?

While employees usually don’t need to file Form 1094-C themselves, the information on it relates directly to the health coverage reported on their Form 1095-C. Employees use Form 1095-C to:  

• Verify the health insurance coverage offered by their employer  
• Determine eligibility for premium tax credits or subsidies if purchasing insurance through the Marketplace  
• Provide proof of coverage when filing their personal taxes  

If you’re an employee and you receive a Form 1095-C, keep it with your tax documents. It’s important for filing your federal taxes correctly and avoiding potential penalties related to coverage.

Common Questions and Confusions about Form 1094-C

What Happens If an Employer Doesn’t Submit Form 1094-C?

Failing to file or submitting an incorrect form can lead to penalties. The IRS takes this seriously because reporting ensures compliance with the ACA’s employer mandate. Penalties can range from hundreds to thousands of dollars, depending on the number of employees and duration of non-compliance.  

Does Form 1094-C Affect My Healthcare Benefits Plan?

Not directly. The form is part of the reporting process rather than the benefits themselves. But accurate reporting reflects your employer’s adherence to health coverage obligations, which in turn impacts your tax situation and access to subsidies if you buy insurance through marketplaces.

Can Small Businesses Avoid These Complexities?

Yes, small employers who are not ALEs aren’t required to file. Also, some small businesses switch to solutions like SimplyHRA, which allow them to control health benefit spending while giving employees the freedom to shop for individual plans. This simplicity can reduce compliance headaches and eliminate some ACA reporting burdens.

How SimplyHRA Can Help Small Businesses Manage Health Benefits Without Filing Form 1094-C

Platforms like SimplyHRA offer an alternative way for small businesses to provide health benefits without getting tangled in complex ACA reporting requirements like Form 1094-C. Here’s how:  

• Enables employers to set budgets for health reimbursement tailored by employee class  
• Allows employees to pick the health insurance plans that best fit their needs  
• Automates expense management and compliance with health benefits laws  
• Includes AI-powered support to answer questions instantly, cutting down HR workload  
• Delivers simple, transparent pricing that scales with your business  

For small businesses reluctant or unable to handle ACA’s employer mandate filings, SimplyHRA’s Individual Coverage Health Reimbursement Arrangement (ICHRA) offers a flexible, compliant option without the need to submit Forms 1094-C and 1095-C.

Final Notes on the Role of Form 1094-C in Small Business Health Benefits

Understanding Form 1094-C is crucial if you operate a business with 50 or more employees, as missing or incorrect filings can be costly. For others, awareness of this form helps you better grasp how employer health coverage regulations impact the benefits you offer or receive. Solutions like SimplyHRA provide an opportunity to offer attractive, compliant health benefits without the traditional group plan complexity and tax form burdens.

SimplyHRA: Supporting Small Businesses Around Form 1094-C and Employer Benefits

At SimplyHRA, we understand the complexities that young businesses, startups, and small employers face navigating health benefits and ACA reporting like Form 1094-C. Our platform is designed to simplify benefits administration and compliance so you can focus on growing your business while your employees enjoy tailored, affordable coverage options. Whether you’re an employer looking to lower compliance headaches or an HR manager seeking smooth benefits management, SimplyHRA offers unmatched support with 24/7 AI-powered assistance and expert guidance. Employees benefit by having the freedom to choose their insurance plans, backed by hassle-free reimbursements.

If you want to talk about how SimplyHRA can help you streamline your health benefits and reduce ACA reporting demands like Form 1094-C, don’t hesitate to reach out. Email info@simplyhra.com or schedule a consultation call at https://www.simplyhra.com/contact. We’re here to help you provide a health benefits experience your employees will love.

Diving Deeper into the Technical Aspects of Form 1094-C

Form 1094-C might seem straightforward at first glance—as a transmittal form—but its technical nuances carry a weight that employers need to handle carefully. Let's take a closer look at some of these finer points to better equip you with practical knowledge.

Understanding the Different Employer Reporting Lines on Form 1094-C

The form includes a variety of key reporting sections that employers must fill out accurately:  

• Part I: Employer Information
  This part captures the legal business name, Employer Identification Number (EIN), and contact details—which need to exactly match IRS records. A mismatch here can cause processing delays or rejections.
• Part II: ALE Member Information
  Here, employers with multiple related companies report each entity’s number of full-time employees and any aggregated ALE groups. This is crucial for compliance since the ACA considers combined employee counts across affiliated employers.
• Part III: Reporting of Unrealized Offers of Coverage
  This section is somewhat less known but important. It accounts for months when an employer offers coverage, but the employee opts out or declines to enroll. Correct reporting here ensures penalties aren’t wrongly assessed.
• Part IV: Certifications
  Sign-off by an authorized company official ensures all information is accurate and complete. This part must not be overlooked, as certification is a legal attestation.

The Importance of Accurate Employee Full-Time Count

Counting full-time employees correctly is essential. The IRS considers anyone working on average 30 hours per week or 130 hours per month as full-time under the ACA. Employers must calculate their full-time equivalent (FTE) headcount by combining part-time employee hours to reach full-time equivalents.

Errors in this calculation can mean unnecessary reporting obligations or penalties. Small businesses fluctuating around this threshold should carefully track hours or consult benefits advisors to confirm their ALE status.

Penalty Overview Connected to Form 1094-C Filing and Health Coverage

Since Form 1094-C is tied to the employer shared responsibility provisions of the ACA, failure to file it—or filing inaccurate information—can have serious financial consequences.

Types of Penalties to Watch For

• Failure to File Correct Information Returns
  The IRS can impose per-form penalties that add up quickly for companies with many employees. For 2024, penalties can be over $300 per incorrect or missing form if not corrected timely.
• Shared Responsibility Payment Penalties
  If an ALE does not offer affordable coverage to full-time employees, or coverage fails to meet minimum value standards, these penalties kick in, and correct Form 1094-C submission documents compliance.
• Late Filing Penalties
  Delayed submissions also attract fines and may trigger IRS correspondence increasing audit risks.

How Employers Can Minimize Penalty Risks

• Accurate, early preparation of Forms 1094-C and 1095-C  
• Leveraging software solutions or third-party services familiar with ACA reporting  
• Staying current on changes in ACA reporting regulations and deadlines  

Navigating the Interaction between Form 1094-C and Marketplace Subsidies

Form 1094-C and its companion, 1095-C, also play a role in determining employee eligibility for premium tax credits on the ACA Marketplace.

What Employers Should Know About Marketplace Interaction

Employees who receive an affordable offer of employer coverage as indicated on these forms are typically disqualified from Marketplace premium tax credits. This means accurate Form 1094-C reporting isn’t just a tax formality; it directly impacts employee benefits and tax outcomes.

For employees, reviewing their 1095-C (and indirectly the 1094-C data) helps decide whether to accept employer coverage or look for better options through the Marketplace.

When Your Business Factors Change: Amending Form 1094-C

Life happens—your business grows, your workforce changes, or you discover reporting errors after submission. The IRS allows employers to file corrected or amended Forms 1094-C and 1095-Cs in such cases.

How and When to Amend

• Use the same forms, checking the “Corrected” box  
• Submit amendments as soon as errors are discovered, ideally before penalties accrue  
• Follow IRS thresholds and instructions for amended form submission  

Working with a benefits platform or tax professional familiar with these requirements can simplify error corrections and keep you in good standing.

Integration Tips: Using Payroll and HR Systems with Form 1094-C

Many modern payroll and HR software solutions integrate ACA reporting functions for Form 1094-C and 1095-Cs. When selecting or upgrading systems, consider these features:  

• Automated tracking of employee hours to determine full-time status  
• Data aggregation for ALE groups across related entities  
• Seamless electronic filing with the IRS to meet deadlines  
• Real-time error checking to avoid rejections  

These integrations reduce manual entry errors, lower administrative burden, and free up your HR staff to focus on strategic initiatives rather than tax compliance paperwork.

Why SimplyHRA Customers Benefit from ACA Reporting Expertise

While SimplyHRA primarily focuses on enabling health benefits with ICHRAs, many customers appreciate that our team stays deeply informed on ACA reporting rules including Forms 1094-C and 1095-C. Even if your business is approaching the ALE threshold, we can offer guidance or connect you with trusted partners to assist.

Our software’s robust platform helps employers manage health reimbursements without getting buried in complex ACA reporting burdens, especially beneficial for small and mid-sized businesses expanding toward 50 full-time employee equivalents.

If navigating Form 1094-C ever seems daunting, SimplyHRA’s dedicated support and expertise stand ready to help you steer clear of penalties while giving employees benefits that truly fit their lives.

Frequently Asked Questions (FAQs) about Form 1094-C:

Q: Who needs to file Form 1094-C if a company operates in multiple states?  

A: If your company operates across multiple states and qualifies as an Applicable Large Employer (ALE) when counting total full-time employees across all locations, you generally need to file one consolidated Form 1094-C for the entire ALE group. Each ALE member (separate legal entity) might also have to provide details via separate 1094-Cs if they are considered separate employers for ACA purposes. Proper aggregation rules for ALE groups set by the IRS are key to ensure compliance.

Q: Can employers file Form 1094-C without submitting the accompanying 1095-C forms?  

A: No, Form 1094-C serves as a transmittal and summary form and must be filed together with all required 1095-C forms. The IRS uses Form 1094-C to confirm the number of 1095-Cs submitted and to validate the reporting year information. Filing 1094-C alone without 1095-Cs will result in incomplete reporting and potential penalties.

Q: What are the formatting requirements for electronic filing of Form 1094-C?  

A: Employers submitting 250 or more Forms 1095-C must file electronically using the IRS Affordable Care Act Information Returns (AIR) system. The electronic Form 1094-C must adhere to specific XML data format standards outlined by the IRS. Small employers submitting fewer than 250 forms may file on paper, but electronic filing can reduce errors and accelerate processing.

Q: Is there a difference between Form 1094-C and Form 1094-B?  

A: Yes. Form 1094-C is used exclusively by Applicable Large Employers (those with 50 or more full-time equivalent employees) to report health coverage offered under the ACA’s employer mandate. In contrast, Form 1094-B and its related 1095-B forms are typically filed by smaller employers or insurance providers to report coverage under minimum essential coverage rules without employer mandate obligations.

Q: Can Form 1094-C be used to report retiree health coverage?  

A: No, Form 1094-C is designed to report offers of coverage to current full-time employees during the calendar year. Retiree coverage specifics are generally reported separately or under different IRS reporting requirements depending on the type of plan, and typically do not appear on the 1094-C or 1095-C forms.

Q: What role does Form 1094-C play in verifying employer responsibility penalties under Section 4980H?  

A: The data submitted on Form 1094-C and the associated 1095-C forms are the IRS’s primary tools for confirming whether an employer has met the ACA’s employer shared responsibility provisions (Section 4980H). This includes verifying coverage offers and affordability. If the IRS finds discrepancies or failures in coverage offers, penalties may be assessed based on these filings.

Q: How long should employers keep copies of Form 1094-C and related forms?  

A: The IRS recommends employers keep copies of Form 1094-C and associated 1095-Cs for at least four years after the due date of the forms. This retention period helps in the event of an IRS audit or if you need to provide documentation regarding compliance with ACA reporting requirements.

Q: What should employers do if they identify an error on a previously filed Form 1094-C?  

A: Employers should file a corrected (amended) Form 1094-C with the IRS, marking the form as “Corrected.” Corrections should be made promptly to minimize the risk of penalties. It’s also important to communicate corrected information to affected employees if their 1095-Cs change. Consulting with a tax professional or benefits expert is advisable when making amendments.

Q: Are there plans to simplify or change Form 1094-C reporting in the near future?  

A: The IRS periodically reviews ACA reporting requirements, including Forms 1094-C and 1095-C, to reduce administrative burdens where possible. While some technical adjustments have been made over time, the core requirements remain stable as of the current tax year. Employers should stay informed via official IRS updates (irs.gov) as future legislative or regulatory changes may affect filing requirements.

Q: Can non-profits or government employers use Form 1094-C?  

A: Yes. Non-profits and governmental employers that meet the Applicable Large Employer criteria must comply with the ACA employer mandate, including filing Form 1094-C and 1095-C forms. However, there may be some unique rules or exemptions applicable, so it is important for these organizations to review guidance specific to their sector and possibly consult with benefits specialists.

Q: What information is needed from employees to complete Form 1094-C and 1095-C accurately?  

A: Employers need basic employee details such as full name, Social Security Number (SSN), and dates of employment. Accurate documentation of the months an employee was full-time and any coverage offers made is essential for accurate reporting. Collecting this information early and maintaining proper records throughout the year helps streamline the filing process.

Q: Does Form 1094-C reporting change if an employer offers a self-insured health plan?  

A: Yes. Employers with self-insured plans must report information on both offer of coverage and actual coverage provided using Form 1095-C, and these are submitted alongside Form 1094-C. The form will include additional data about the coverage offered under the self-insured plan, which differs from fully insured plans where only offers are reported.

Q: How does Form 1094-C impact seasonal or temporary workers?  

A: Seasonal or temporary employees are counted toward Full-Time Equivalent (FTE) calculations if they work 30 hours or more per week on average during the applicable measurement period. Coverage offers to these employees must be reported if they meet full-time status. However, employees working less than full-time hours are generally excluded from detailed coverage reporting.

Q: Are there exceptions or safe harbors that affect how employers complete Form 1094-C?  

A: Yes. The IRS provides affordability safe harbors and transition relief provisions that affect how employers report coverage offers on Form 1095-C (which Form 1094-C accompanies). These safe harbors also influence whether penalties apply, though the transmittal form itself summarizes this data. Employers should carefully review safe harbor rules when preparing their filings.

Q: Can foreign or remote employees be reported on Form 1094-C?  

A: Employees who work outside the United States but are on the employer’s payroll might still need to be reported if they qualify as full-time employees under the ACA. However, some foreign workers and employees covered by certain government-sponsored plans might be exempt. Employers should evaluate employee work locations and coverage eligibility carefully.

Q: Is there a difference in due dates for filing Form 1094-C with the IRS and distributing related forms to employees?  

A: Yes. Employers must furnish Form 1095-C to employees by January 31 of the year following the reporting year. Filing Form 1094-C and 1095-Cs with the IRS is generally due by February 28 (if filing on paper) or March 31 (if filing electronically). Timely distribution to employees ensures they have the documentation needed for their personal tax returns.

Q: How can employers confirm the IRS has accepted their Form 1094-C submission?  

A: For electronic filings, the IRS’s Affordable Care Act Information Returns (AIR) system provides acknowledgments once the submission is processed. Paper filers may receive less direct confirmation, but can check by contacting the IRS or using third-party filing services that provide receipt confirmations. Monitoring acceptance status helps address issues before penalties occur.

Q: Are corrections to previously filed Forms 1094-C common, and how complicated are they?  

A: Corrections do occur, especially for businesses new to ACA reporting. While amending requires careful attention to detail to ensure consistency between Form 1094-C and all related 1095-Cs, most software solutions and benefits platforms simplify the process. Prompt action and professional advice can minimize administrative headaches.

Q: Does offering an Individual Coverage Health Reimbursement Arrangement (ICHRA) change the requirements to file Form 1094-C?  

A: Offering an ICHRA typically maintains an employer’s obligation to file Forms 1094-C and 1095-C if they meet ALE thresholds because these forms still report offers of coverage. However, ICHRA arrangements can alter who is eligible for coverage offers and the nature of coverage reported. Working with benefits providers like SimplyHRA can help ensure accurate reporting.

Q: What resources does the IRS provide to assist with Form 1094-C preparation?  

A: The IRS website offers detailed instructions for Form 1094-C and related forms, including FAQ resources, filing tips, and video tutorials. Additionally, the IRS provides publications such as Publication 5208, which offers guidance on ACA employer reporting. Leveraging these resources can improve your filing accuracy and confidence.

Simplifying Health Benefits and ACA Reporting with SimplyHRA

Navigating the complexities of Form 1094-C and related ACA reporting can feel overwhelming for many small businesses, especially those approaching the 50 full-time employee threshold. At SimplyHRA, we understand these challenges firsthand because we’ve been in the trenches alongside small business owners and HR professionals striving to provide great health benefits without drowning in compliance paperwork. Our platform is designed to lighten that load by automating the heavy lifting involved with health reimbursement arrangements and ensuring your offerings stay compliant with federal regulations.

Small business owners and HR managers have found immense value in SimplyHRA’s straightforward, transparent approach to health benefits. By empowering employees with choice and simplifying reimbursement processes, we help create benefits programs that employees truly appreciate while keeping employers confidently in control of costs and compliance. Employees gain the freedom to select coverage that fits their unique needs — without confusing group plans or surprise expenses. Across startups, growing businesses, and established small employers, SimplyHRA consistently delivers a health benefits experience built on ease, flexibility, and trust.

If your business is managing or anticipating the demands of ACA reporting like Form 1094-C, or if you want to offer your team personalized, tax-advantaged health benefits without extra complexity, SimplyHRA is here for you. Reach out to us for a consultation to explore how we can streamline your employer or employee benefits. Email info@simplyhra.com or schedule a call today at https://www.simplyhra.com/contact. Let’s take the stress out of benefits so you can focus on what you do best — growing your business.