Frequently Asked questions regarding the affordable care act (ACA) and IRS Forms 1095-B and 1095-C
The following Frequently Asked Questions (FAQs) have been developed to assist employees in understanding the administration of the Affordable Care Act (or ACA).
There is no difference. These are just different names for the same law. Within this document, we will refer to the law as the ACA.
The law currently remains in effect. We will continue to monitor all legislative activity relating to the ACA and will provide updates as information becomes known.
On December 14, 2018 the Federal District Court issued a ruling finding that the Patient Protection and Affordable Care Act (PPACA) is unconstitutional in its entirety. While the future of this litigation is unknown, it is important to emphasize that PPACA remains the law.
Most Americans and other people legally in the U.S. must have “minimum essential” coverage, or they will have to pay a penalty when they file their federal income tax return for the year in which they don’t have coverage. This is otherwise known as the “individual mandate.” Effective January 1, 2019 the Individual Mandate penalty has been reduced to $0.
In 2016, all Applicable Large Employers (ALEs) must offer affordable minimum essential coverage (MEC) that provides minimum value to 95% of their full-time employees (and dependents) as defined by the ACA. This is also known as the “employer mandate” or the “employer shared responsibility provision.”
Under the Affordable Care Act (ACA), the definition of full-time includes employees who are paid an average of 130 hours/month (30 hours week). This includes paid vacation leave, sick leave, jury duty pay, etc. Status as a full-time employee under the ACA does not affect your status as a full-time or non-full-time employee for any other purpose.
The Health Insurance Marketplace was designed to help you find individual health insurance that meets your needs and fits your budget. The Marketplace offers “one-stop shopping” to find and compare private health insurance options. Depending on your household income and size, you may also be eligible for a tax credit that lowers your monthly premium right away.
You will not be able to purchase coverage through the Health Insurance Marketplace using pre-tax dollars. Also, if you purchase individual health insurance coverage through the Health Insurance Marketplace, your employer will not be permitted to make contributions towards your coverage as it would for its own plan.
The Health Insurance Marketplace may offer more choices than most employer plans. If your employer does not provide coverage that meets requirements for minimum value and affordability, and your income is low enough, you may be able to get a tax credit if you buy coverage through the Health Insurance Marketplace. It should be noted that State of Wisconsin health insurance plans available through the University meet the requirements for affordability and value under the ACA.
ACA Tax Forms
There are three IRS forms that were created to support the ACA: Forms 1095-A, 1095-B and 1095-C.
Form 1095-A is the Health Insurance Marketplace statement. You'll get this statement if you bought health coverage through the "Marketplace" - the web-based insurance markets that the federal government and states set up under the ACA.
Form 1095-B is a statement from your health insurance company verifying that you and other members of your household had insurance coverage that met the requirements of the ACA during the prior year. This is for people whose coverage was fully insured with an insurance carrier (includes all offered health plans except Access Plan, Access HDHP and SMP).
Form 1095-C is a statement from your employer providing details about the health coverage offered by your employer and whether or not you chose to participate. Individuals that purchased health insurance coverage through the Health Insurance Marketplace will use the information found on this form to determine if they are eligible for a premium tax credit.
More information at: https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families
Beginning in 2016, employers must file Forms 1095-C with the IRS to report information about the offers of health coverage made to full-time employees during the previous calendar year and provide copies of Forms 1095-C to those employees. Like W-2s, copies of Forms 1095-B and/or 1095-C should be provided to you early in the calendar year for the previous year.
You will receive a Form 1095-C if you were a full-time employee (as defined by the ACA) for all or some months of the prior calendar year. You are receiving a copy of the Form 1095-C so you know what information has been reported to the IRS about the offer of health coverage made to you and your family. Please see: https://www.irs.gov/Affordable-Care-Act/Questions-and-Answers-about-Health-Care-Information-Forms-for-Individuals for more information.
Beginning in 2016, the insurance carrier must file one copy of Form 1095-B with the IRS and furnish another copy to the individual for whom coverage was provided during the previous calendar year. You are receiving a Form 1095-B because the insurance carrier provided either you and/or your family member(s) with health coverage during the previous calendar year. Form 1095-B also documents your compliance with the Individual Mandate, meaning that you and/or your family member(s) may not be liable for a penalty. See the answer to Question-F6 below for more information.
The information included on your Form W-2, Box 12, code DD only states the total cost (employee & employer share) of the employer-sponsored health insurance you actually enrolled in during a single calendar year. It does not show the months in which you enrolled in coverage or the lowest cost (employee share), employee-only coverage offered to you. Forms 1095-B and 1095-C show enrollment information on a monthly basis and include information about the lowest cost (employee share), employee-only coverage offered to you. Thus, your Form W-2 contains different information from that of Forms 1095-B and 1095-C.
Generally, no. Form 1095-Cs are only required to be provided to full-time employees. As for Form 1095-B, all family members that are covered through your enrollment (for example, because you elected family coverage) should appear on the same Form, which is required to be provided to you as the “responsible individual.” However, in some instances, a spouse and/or dependent may receive his/her own copy of Form 1095-B if he/she independently enrolls in COBRA coverage and you do not enroll in COBRA coverage (e.g., divorce).
*If a spouse and/or dependent is also employed full time, he or she may receive these forms from his or her employer as well.
You should retain both your Forms 1095-B and 1095-C with your tax records. While the information on these forms may assist in preparing a return, they are not required. You should not wait for these forms to file your returns as you normally would.
Please see the IRS website for more information on what is needed to file your taxes.
If you have any questions regarding your 1095-B, contact your health plan. If you have questions regarding your 1095-C, please contact the UW System Service Center at firstname.lastname@example.org or (855) 489-7877 or (608) 262-0600.
The UW System is statutorily prohibited from offering employer-sponsored health insurance to student help employees. To ensure student help employees are not classified as “full-time” under the ACA, institutions must (1) limit use of lump sum payments and (2) cap hours of service.
Effective January 1, 2016, the UW System Student Employment policy UPS OP GEN 20 limited student help hours worked to 25 hours per week. Under the UW System Student Employment policy, students may, however, work up to 40 hours per week during weeks when class is not in session providing it is also permitted by the individual institution. Federal Work-Study hours, including the institution match, will not count towards the hours evaluated to determine a full-time employee for purposes of the ACA.
A temporary exception to both lump sum payments and the cap on hours is being granted for Resident Assistant/Resident Advisors/Resident Counselors. Student employees in this classification are allowed to be paid on a lump sum and work over 25 hours per week until further clarification is provided, but will be moved to a separate job code and actual hours must be tracked and reported at the time of a lump sum payment.
We will not count graduate assistant hours towards the student help hour cap. For student help hours, the hours worked in that classification that are not in a job funded by federal work study dollars would still need to be capped at 25, even if the risk is reduced by the employee being dually employed in a benefits eligible position.
Glossary of Terms
Employees who meet the criteria established by the Affordable Care Act will be treated as full-time employees solely for ACA reporting purposes and the Employer Mandate during a particular period called a stability period.
One of the most common terms used to refer to two separate pieces of legislation signed into law by President Barack Obama on March 23, 2010. The two pieces of legislation were the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010.
Employers subject to the employer shared responsibility provisions of the ACA.
Employees who are eligible for the Graduate Short-Term Academic Staff or Wisconsin Retirement System benefits package based on their employment at the UW System. See more at: https://www.wisconsin.edu/ohrwd/benefits/newemp/
The Affordable Care Act requires nearly everyone to have health insurance that meets minimum standards. With some exceptions, people who do not maintain health insurance coverage will have to pay a penalty starting in 2014. Effective January 1, 2019 the Individual Mandate penalty has been reduced to $0.
MEC is generally any type of employer-sponsored health coverage, certain types of governmental coverage such as Medicare or Medicaid, and other types of health coverage specifically identified by the Department of Health and Human Services.
Minimum value is provided by the plan if it pays for at least 60% of the costs of benefits and provides inpatient hospitalization services and physician services.