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Running a business is no easy feat. You take on a plethora of responsibilities for the company as well as its employees. Providing healthcare to your team is one of the obligations. This is where Form 1095-C comes into the picture.

What Is Form 1095-C?

Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) is used to report to the IRS about the health coverage offered to employees, under the Affordable Care Act.

So, who needs to file form 1095-C? If you averaged 50+ full-time or full-time-equivalent employees the previous year, you must file it. These employers are referred to as Applicable Large Employers (ALEs).

The form has different sections or "parts" which need to be filled with utmost care. Fully Insured employers who have more than 50 employees should complete parts I and II of form 1095-C. Meanwhile, self-insured employers must complete all the parts of the form.

Confusing enough? Don't stress. If you're stretched thin to make sense of 1095-C instructions, we have your back! This blog breaks down everything you must know about this important tax form.

1095-C Key Deadlines

Employers must send the forms to the eligible employees as well as to the IRS. Mark these important 1095-C deadlines 2026 season on your calendar, to stay compliant and avoid 4980H penalties from the IRS:

But what happens if you fail to stick to the deadlines or furnish copies to the employees? You invite significant penalties from the IRS! The penalties start at $60 per form and can go up to $660. This depends on how late the filing was and if there was intentionally disregard.

If you need an extension, file Form 8809 with the IRS on or before the original deadline. You can get an automatic 30-day extension to file 1095-C forms.

Form 1095-C Filing Instructions (Parts I-III)

Form 1095-C has three sections. Each section serves a distinct purpose and must be filled out correctly before filing. Here are 1095-C instructions for different parts:

  • Part I covers information about the employee and employer.
  • Part II is about the healthcare coverage offered to the employee.
  • Part III lists all the individuals covered by the plan.

Refer to the following table for detailed instructions to fill out 1095-C Box 14–16 and the other sections.

Form Area Line Overhead
Part I - Employee Information 1 Name Worker’s full legal name
2 SSN Social Security number
3 Street Address Mailing street and apartment
4 City/Town City
5 State/Province State or province
6 ZIP/Postal ZIP or foreign postal code
Part I - Employer Information 7 Employer Name Your company’s legal name
8 EIN Employer tax ID
9 Street Address Employer mailing street
10 City/Town City
11 State/Province State or province
12 ZIP Code ZIP or postal code
Part II - Offer and Cost 13 Plan Start Month Enter two-digit number indicating the month during which the plan year begins
14 Offer Code Code 1A–1T: what you offered each month
15 Employee Cost Monthly price for the lowest self-only plan (blank if code 1A)
16 Safe Harbor Code Code 2A–2I: why a penalty shouldn’t hit you
Part III – Covered Individuals (self-insured only) 17 and rows List each covered person, their SSN/DOB, and months covered
Note:
  • Plan Start Month (Line 13): Enter the two-digit number indicating the month during which the plan year begins. For example, use "01" for January, "02" for February, etc.
  • Self-insured 1095-C Part III: This section is where employers report details about any individual covered under a self-insured health plan.

So, why should you care? These lines prove who got an offer, what the offer looked like, and who had coverage. The IRS checks these key facts before issuing ACA penalties or rejecting filings.

What are 1095-C Codes on Boxes 14 and 16?

Do you want to accurately report and avoid IRS rejections? Then it's important to understand the ACA codes.

Offer Codes (Line 14: 1A–1T): These provide a snapshot of the coverage offered each month. For example:

  • 1A – Full, affordable, family coverage offered
  • 1H – No offer of coverage

Safe-Harbor Codes (Line 16: 2A–2I): The Affordable Care Act Safe Harbor codes show the IRS why no penalty should apply by demonstrating compliance. Example:

  • 2G – Coverage deemed affordable using the Federal Poverty Line (FPL) rule

Who Counts as ‘Full-Time Employees’?

Rule What It Means Quick Tip
30-Hour Weekly Benchmark If an employee averages 30 hours per week, the ACA says they are full-time employees. Think of it as four normal workdays (7.5 hrs x 4).
130 Hours per Month Shortcut The IRS also lets you count 130 hours in any calendar month as full-time. Use this if weekly schedules jump around.
Monthly Measurement Method Check each individual month. Count the hours worked in that month only. Best for businesses with steady schedules.
Look-Back Measurement Method
Variable-Hour Employees		 Average each employee’s hours over the past 3–12 months (your choice). If they averaged 30 hours/week, treat them as full-time for the next “stability period.” Good for variable or seasonal staff. Choose the period once and stick with it.
Variable-Hour Employees People whose hours you can’t predict (e.g., on-call, project-based). Use the look-back method to avoid constant re-classifying. Label them “variable” in your tracking spreadsheet.
Seasonal Workers Hired 120 days or fewer per year (e.g., holiday retail, summer camps). You may exclude them from full-time counts if they stay under 120 days. Track start and end dates carefully.
Breaks in Service If an employee is gone 13 weeks (26 for schools) and then returns, you may treat them as a new hire for ACA purposes. Note the return date. It shows when fresh measurement starts.
Special Unpaid Leave FMLA, military leave, or jury duty do not count against average hours. Credit the employee with hours they would have worked.

E-File in 5 Simple Steps

E-filing your form 1095-C is simpler than you think. You can do this through the IRS AIR system. Here's your easy step-by-step guide to ace ACA reporting for employers 2025:

Step 1

Get your TCC: Apply once to get your 5-digit Transmitter Control Code that opens the IRS AIR site.

Step 2

Create the file: Let your payroll/HR software generate the IRS-friendly XML format plus manifest file.

Step 3

Do a test run: This is an important step to prevent rejections. Upload a dummy file on AIR Testing to catch format issues before the real submission.

Step 4

Send the real file: Upload on AIR Production and pay attention to the status. The status can be ‘Accepted’, ‘Accepted with Errors’, or ‘Rejected’.

Step 5

Fix errors quickly: If you see “Accepted with Errors,” correct only the flagged row, re-upload, and you’re good to go!

How to Fix Filing Mistakes?

Mistakes are not uncommon. If you find yourself in these shoes, correct your errors diligently to reduce penalties.

Small typo or wrong amount

File a CORRECTED form for that specific employee. Provide the corrected copy to the employee.

Wrong file or total rejection

Mark the bad file Void, build a clean Replacement file, and resend.

Forgot an employee

File an additional Original form for that person. No special box is needed. Don't forget to send the copy to the recipient before the deadline.

Save your proof

Keep IRS receipt numbers and proof that you sent any corrected copies to the employees for at least three years.

Real-Life Scenarios

Situation Correct Entry Why It’s Right
Variable-hour worker averages 33 hours after a 12-month look-back Code 1E; safe-harbor 2B for earlier months Meets offer and affordability rules
Employee quits in June; COBRA starts in July July–December: 1H/2A Former employee; no offer needed
Retiree on self-insured plan Add retiree rows in Part III Provides §6055 proof
Two EINs in one group, same worker Each EIN files its own 1095-C Required by aggregation rules
Affordability via FPL safe harbor Use 2G all months offered Shows price met IRS limit

Frequently Asked Questions

Yes, if you're filing 10 or more total information returns total (including W-2s, 1099s,).

Yes. You still need to show what you offered using the offer code (box 14) and include a safe-harbor code (box 16).

COBRA or Consolidated Omnibus Budget Reconciliation Act is only for former employees of your company. It does not count as an “offer” for active staff still employed with your company.

It's because an employee's name doesn't match their Social Security number. Run IRS TIN match before filing to spot mismatches early.

Yes, if in a single year they’ve worked under different EINs within the same controlled group.